Blasts from the past

Swiss Re experts delve into history to assess losses from future storms in Europe.

Some observers say that the insurance industry is operating in a rapidly evolving risk environment and that these changes are coming in a myriad of guises, from economic and socio-political to technological and environmental. They also say we should prepare for these nascent risks we need to look forward. Analysis of historical data doesn't cut it anymore.

You hear these messages with increasing frequency these days. Swiss Re's Head of Atmospheric Perils, Peter Zimmerli, would beg to differ.

In a new publication "Winter storms in Europe: Messages from forgotten catastrophes," authors Peter Zimmerli and Dominik Renggli assess future insurance losses should similar, historic weather events occur in the future.  Analysing three major winter storms that swept across late 19th century Europe, the publication argues that a rear-view mirror approach such as this can prove just as useful as artificial scenarios purely generated by weather or climate models.

Sound grasp of historical activity crucial to sound modelling

Zimmerli and his colleagues were moved to look more closely at these violent storms in the course of the development of Swiss Re's new model for the assessment of European winter storm risks. Says Zimmerli: "Irrespective of the peril, we have always been convinced that to devise a sound natural catastrophe model, you need a thorough understanding of historic activity."

To try and pin down the so-called "peak gust footprints" and general character of these historical storms, the publication could not rely on an abundance of scientific data that is available, for example, on historical hurricanes. For these, there are publicly accessible and commonly accepted “best track” lists of past events going back to the 19th century. There is no such database for European winter storms. Instead, the authors were obliged to examine written records in newspapers, scientific journals, village chronicles and forestry reports.

Fallen timber tells a story

Zimmerli relates a fascinating piece of evidence he and his colleagues discovered in the course of their research: "Outside a hunting lodge in a forest north of Paris, a large commemorative plaque reads: 'On the March 12, 1876, a cyclone travelling from west to east crossed this forest and toppled 100,000 trees in just a few hours.' This is a clear sign of the havoc that must have been wrought on forests in Europe on that day."

The benefit

Through examining three of the harshest European winter storms of the 19th century, Swiss Re is contributing to the debate surrounding extreme weather events and their potential impacts. By sifting through all the available information, it provides a best estimate of which geographies these events affected exactly and how intense they were. Moreover by plugging the resulting wind footprints into its European winter storm model, Swiss Re has been able to calculate potential insurance market losses, if these blasts from the past were to happen now. One of the publication's sobering conclusions is that during the twenty-year period from 1875-1895, Europe was buffeted by three European winter storms that would trigger much larger insurance losses today than any comparable event in recent decades.

Zimmerli concludes: "We look forward to discussing our findings with our stakeholders and, resources permitting, the possibility of customised research into these events and their potential impact on balance sheets."

Published 19 October 2015

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