Extreme floods in Western Europe in mid-July have generated claims currently estimated at $11 billion
The extreme flooding event in Western Europe in mid-July has generated the largest industry loss figure (ex US) in 2021, currently estimated at $11 billion. This is followed by the severe convective storms in Europe in June which to date have generated an industry loss of $5.1 billion, and the Fukushima earthquake in Japan in February with an industry loss of $2.5 billion.
The Q3 period also witnessed another significant industry loss in China’s Henan province when extreme rainfall in July caused flood-related industry losses of $1.9 billion, representing the largest Cat event loss ever for the Chinese insurance market.
While the weather patterns are not directly comparable, it is striking that three of these events are linked to bursts of extreme precipitation during the summer months which caused devasting flooding and hail.
This is in line with climate-related model forecasts, which indicate an increase in severity and frequency of extreme precipitation events resulting from higher temperatures and increased water-holding capacity in the atmosphere. Coupled with the growth in insured assets, this ever-changing risk landscape creates a formidable challenge for the insurance industry.
The floods in Europe occurred between 12 to 18 July 2021 and mainly affected Germany, Belgium, the Netherlands and Luxembourg. Austria, France, Switzerland and the United Kingdom were also affected, but to a much lesser extent.
Unlike in previous major flood events in Europe (2002, 2013), which were dominated by slow-moving flood waves running downstream along major rivers, the 2021 floods were characterised by bursts of devastating flash flooding in small- and medium-scale river catchments. The floods caused extensive property and infrastructure damage and resulted in the loss of at least 240 lives.
Matthias Saenger, technical manager of CLIX, commented: “The benign period in international Cat industry losses in 2020 and until early 2021 changed dramatically in June when severe convective storms in Europe brought extreme rainfall and hail, causing significant damage primarily across Germany and Switzerland. These storms were followed by the major flood events in July in Europe and China, which generated record losses for the insurance industry.”
He continued: “The primary role of CLIX is to provide a consistent and coherent data set for major industry losses since the year 2000. As our Index expands, we would expect that the predicted trends in the frequency and severity of extreme weather events which have been indicated by climate-focused model projections will become increasingly evident in this time series.”