Windstorms and Insured Loss in the UK RMetS Scottish Centre Postgraduate Student Evening 12 January 2007 Richard Hewston [email protected] University

Windstorms and Insured Windstorms and Insured Loss in the UKLoss in the UK

RMetS Scottish Centre Postgraduate Student Evening 12 January 2007

Richard [email protected]

University of East Angliahttp://www.uea.ac.uk/~e470848/

Supervisors: Dr Stephen Dorling Dr David Viner

(University of East Anglia)

Funding: Worshipful Company of Insurers

OutlineOutline

1.1. Weather and economic lossWeather and economic loss

2.2. An example of a destructive An example of a destructive European windstorm – Windstorm European windstorm – Windstorm Erwin (Jan 2005)Erwin (Jan 2005)

3.3. Assessing and Modelling RiskAssessing and Modelling Risk

4.4. A windstorm model for the UKA windstorm model for the UK

5.5. Climate Change and Future lossesClimate Change and Future losses

OutlineOutline


Worldwide Natural Worldwide Natural CatastrophesCatastrophes

Increasing economic and insured lossIncreasing economic and insured loss Since 1970, of the most expensive 40 insured losses, 33 were Since 1970, of the most expensive 40 insured losses, 33 were

weather related with 29 windstorm related.weather related with 29 windstorm related. Successive record annual insured losses in 2004 and 2005Successive record annual insured losses in 2004 and 2005

Source: Munich Re (2006)


Increasing economic and insured lossIncreasing economic and insured loss Since 1970, of the most expensive 40 insured losses, 33 were Since 1970, of the most expensive 40 insured losses, 33 were

weather related with 29 windstorm related.weather related with 29 windstorm related. Successive record annual insured losses in 2004 and 2005Successive record annual insured losses in 2004 and 2005



Increasing economic and insured lossIncreasing economic and insured loss Since 1970, of the most expensive 40 insured losses, 33 were weather related with Since 1970, of the most expensive 40 insured losses, 33 were weather related with

29 windstorm related.29 windstorm related. Successive record annual insured losses in 2004 and 2005Successive record annual insured losses in 2004 and 2005

The trend exhibited is influenced by economic and The trend exhibited is influenced by economic and demographic shifts and well as natural factors.demographic shifts and well as natural factors.


Weather Related Insured Loss Weather Related Insured Loss in the UKin the UK

~70% of all losses associated with storms~70% of all losses associated with storms ~30% of all losses associated with ~30% of all losses associated with

SubsidenceSubsidence

Weather Related Insured Loss

0

500

1000

1500

2000

2500

3000

3500

4000

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Year

£m (

adju

sted

to

200

5 £

valu

es)

Total


Domestic claims make up 70-85% of total Domestic claims make up 70-85% of total losseslosses

Business Interruption accounts for ~12% of Business Interruption accounts for ~12% of commercial claims (~3% of total weather commercial claims (~3% of total weather related insured loss)related insured loss)


0

500

1000

1500

2000

2500

3000

3500

4000

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Year

£m (

adju

sted

to

200

5 £

valu

es) Commercial

Total Domestic

Total


~50% of domestic insured loss is related to ~50% of domestic insured loss is related to windstormswindstorms


0

200

400

600

800

1000

1200

1400

1600

1998 1999 2000 2001 2002 2003 2004 2005

Year

£m

(a

dju

ste

d t

o 2

00

5 £

va

lue

s)

Domestic (Storm)

TOTAL


4th quarter 2000 - Wettest Autumn for more than 200 years

Weather Related Domestic Property Insured Loss

0

100

200

300

400

500

600

700

800

900

1997

Qtr

4

1998

Qtr

1

1998

Qtr

2

1998

Qtr

3

1998

Qtr

4

1999

Qtr

1

1999

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2

1999

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3

1999

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4

2000

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1

2000

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2

2000

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3

2000

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4

2001

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1

2001

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2

2001

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2001

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4

2002

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1

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2002

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3

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1

2003

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2003

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2003

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4

2004

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1

2004

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2004

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3

2004

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4

2005

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2005

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2005

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2005

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Quarter

Ins

ure

d L

os

s (

£m

)(F

igu

res

ad

jus

ted

to

20

05

va

lue

s)

Total

Storm


4th quarter 2000 - Wettest Autumn for more than 200 years

1st quarter 2005 due largely to windstorm Erwin

Weather Related Domestic Property Insured Loss

0

100

200

300

400

500

600

700

800

900

1997

Qtr

4

1998

Qtr

1

1998

Qtr

2

1998

Qtr

3

1998

Qtr

4

1999

Qtr

1

1999

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2

1999

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1999

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4

2000

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2000

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2000

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2000

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2001

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1

2001

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2001

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ure

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Total

Storm

OutlineOutline


2.2. An example of a destructive An example of a destructive European windstorm – European windstorm – Windstorm Erwin (Jan 2005)Windstorm Erwin (Jan 2005)

Windstorm ErwinWindstorm Erwin Struck Northern Europe 7-9Struck Northern Europe 7-9thth January 2005 January 2005 Torrential rain and gale force windsTorrential rain and gale force winds One of the most severe storms to hit Northern Europe One of the most severe storms to hit Northern Europe

in the last 15 yearsin the last 15 years

Source: Met Office (2005)

Windstorm ErwinWindstorm Erwin

Evidence of a “Sting Jet”Evidence of a “Sting Jet” Propagates strong winds from above to the ground Propagates strong winds from above to the ground Distinct from the usual strong wind region associated Distinct from the usual strong wind region associated

with the warm conveyor belt and main cold frontwith the warm conveyor belt and main cold front

Most damage is associated with this featureMost damage is associated with this feature

Windstorm ErwinWindstorm Erwin

Wind at altitude of 9km for 1800GMT on 7th January, 2005

Source: Danish Met Institute

Windstorm ErwinWindstorm Erwin Insured lossesInsured losses

UK ~£250mUK ~£250m Denmark ~£400mDenmark ~£400m Sweden ~£230mSweden ~£230m

Sweden recorded Sweden recorded windspeeds of 33m/s windspeeds of 33m/s inland, resulting in inland, resulting in unprecedented damage unprecedented damage to the forest industry to the forest industry (£1.6-2.3bn)(£1.6-2.3bn)

Industry wide, the figure Industry wide, the figure for total insured losses for total insured losses relating to Windstorm relating to Windstorm Erwin stands at £1.1bnErwin stands at £1.1bn

Wind at altitude of 9km for 1800GMT on 7th January, 2005

Source: Danish Met Institute

OutlineOutline


2.2. An example of a destructive European An example of a destructive European windstorm – Windstorm Erwin (Jan 2005)windstorm – Windstorm Erwin (Jan 2005)

3.3. Assessing and Modelling Assessing and Modelling RiskRisk

Assessing RiskAssessing Risk

Crichton, D. (1999). The Risk Triangle, Natural Disaster Management. Journal, Ingleton. London, Tudor Rose: 102-103.

Risk Risk TriangleTriangle

Source: Crichton (1999)

Exposure – position, orientation, regional terrain, topography

Vulnerability - shape, constructional details and state of maintenance (preparedness)

Hazard – weather event

Assessing RiskAssessing Risk

Crichton, D. (1999). The Risk Triangle, Natural Disaster Management. Journal, Ingleton. London, Tudor Rose: 102-103.

Windstorm damage is the Windstorm damage is the result of wind loads result of wind loads exceeding the resistance of exceeding the resistance of the structure, affecting the structure, affecting parts of the building such parts of the building such as roofs, envelopes and as roofs, envelopes and openings. openings. 79% of all damage since 79% of all damage since

1970 is related to roofs1970 is related to roofs

Important factor is Important factor is VulnerabilityVulnerability Different regions have Different regions have

different building different building standardsstandards



Exposure – position, orientation, regional terrain, topography

Vulnerability - shape, constructional details and state of maintenance (preparedness)

Hazard – weather event

OutlineOutline




4.4. A windstorm model for the A windstorm model for the UKUK

Modelling Windstorm LossModelling Windstorm Loss

Following Klawa and Ulbrich (2003)Following Klawa and Ulbrich (2003)

Windstorm loss modelling using Windstorm loss modelling using wind speeds from a network of UK Met wind speeds from a network of UK Met

Office observing stations Office observing stations various socioeconomic data sets which various socioeconomic data sets which

help to quantify vulnerabilityhelp to quantify vulnerability Claims data from insurers for Claims data from insurers for

verificationverification

Klawa, M and U. Ulbirch (2003), Klawa, M and U. Ulbirch (2003), A Model for the Estimation of Storm Losses and the Identification of A Model for the Estimation of Storm Losses and the Identification of Severe Winter Storms in GermanySevere Winter Storms in Germany, Natural Hazards and Earth Systems Sciences, Vol. 3, pp725-732 , Natural Hazards and Earth Systems Sciences, Vol. 3, pp725-732


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60°0'0"N

Observed hourly wind Observed hourly wind information from UK information from UK Met OfficeMet Office

The 98th percentile The 98th percentile value of the daily value of the daily maximum mean and maximum mean and gust speeds used, gust speeds used, incorporating “wind incorporating “wind climate”climate”

98th percentile Maximum Gust Speeds

Dorland, K., J. Palutikof and R. Tol (2000). Modelling Storm Damage in the Netherlands and the UK., in Weather Impacts on Natural, Social and Economic Systems in the Netherlands. Institute for Environmental Studies, Vrije Universiteit, Amsterdam: 57-81.Hanson, C., T. Holt and J. Palutikof (2004). An Integrated Assessment of the potential for Change in Storm Activity over Europe: Implications for Insurance and Forestry in the UK. Norwich, Tyndall Centre: 98.

Wind Data


Maximum windspeeds, not mean windspeeds, closely Maximum windspeeds, not mean windspeeds, closely related to damage (eg. Dorland et al (2000), Hanson related to damage (eg. Dorland et al (2000), Hanson et al (2004)).et al (2004)).Dorland, K., J. Palutikof and R. Tol (2000). Modelling Storm Damage in the Netherlands and the UK., in

Weather Impacts on Natural, Social and Economic Systems in the Netherlands. Institute for Environmental Studies, Vrije Universiteit, Amsterdam: 57-81.Hanson, C., T. Holt and J. Palutikof (2004). An Integrated Assessment of the potential for Change in Storm Activity over Europe: Implications for Insurance and Forestry in the UK. Norwich, Tyndall Centre: 98.

Wind DataR values for R values for Windspeed v Insured Loss

Relationship

R Value

Mean Windspeed

Max Windspeed

Exponential 0.36 0.46

Squared 0.51 0.65

Cubic 0.53 0.66

Based on sixty four 3-month periods

Modelling Windstorm LossModelling Windstorm LossSocio-economic Socio-economic DataData

Census data from Census data from 1981,1991 and 20011981,1991 and 2001

Experian data Experian data “Wealth indicators”“Wealth indicators”

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Household Density (2000)

Modelling Windstorm LossModelling Windstorm LossClaims Claims DataData

Ecclesiastical Ecclesiastical Insurance GroupInsurance Group

Norwich Union (via Norwich Union (via loss adjustors loss adjustors Cunningham Lindsey)Cunningham Lindsey)

Claims data for Claims data for domestic properties domestic properties suffering losses suffering losses associated from associated from windstormwindstorm

Modelling Windstorm LossModelling Windstorm LossClaims Claims DataData

Ecclesiastical Ecclesiastical Insurance GroupInsurance Group

Norwich Union (via Norwich Union (via loss adjustors loss adjustors Cunningham Lindsey)Cunningham Lindsey)

Claims data for Claims data for domestic properties domestic properties suffering losses suffering losses associated from associated from windstormwindstorm

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Claims Associated with Windstorm Erwin (Jan

2005)


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Windstorm ErwinMax Gust Speeds (normalised to 98th

percentile value)10°0'0"W

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56°0'0"N 56°0'0"N

58°0'0"N 58°0'0"N

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Modelling Windstorm LossModelling Windstorm LossWindstorm Erwin

Predicted insured loss10°0'0"W

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Modelling Windstorm LossModelling Windstorm LossWindstorm Erwin

Predicted insured loss10°0'0"W

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58°0'0"N 58°0'0"N

60°0'0"N 60°0'0"N

Actual insured loss

OutlineOutline




4.4. A windstorm model for the UKA windstorm model for the UK

5.5. Climate Change and Future Climate Change and Future losseslosses

Climate Change and Future Climate Change and Future LossesLosses

Crichton, D. (1999). The Risk Triangle, Natural Disaster Management. Journal, Ingleton. London, Tudor Rose: 102-103.Dlugolecki, A. (2004). A Changing Climate for Insurance - A summary report for Chief Executives and Policymakers, Association of British Insurers.



Climate change Climate change

Change in Change in HazardHazard


Crichton, D. (1999). The Risk Triangle, Natural Disaster Management. Journal, Ingleton. London, Tudor Rose: 102-103.Dlugolecki, A. (2004). A Changing Climate for Insurance - A summary report for Chief Executives and Policymakers, Association of British Insurers.



Climate change Climate change

Change in Change in HazardHazard

ABI believe we are currently seeing an annual increase in losses of 2-4% due to climate change (Dlugolecki 2004)

Specific Risks of Climate Change: Shortening times between

events Shifting spatial distribution Changing variability of loss More hybrid events with

multiple consequences (eg. ENSO)

Abrupt or nonlinear changes in loss


Threshold Exceedance (eg. Dam failure)

Hazard

Lo

ss

Threshold Point


Threshold Exceedance (eg. New Orleans dykes breaking during Katrina)

Damage functions NOT a linear relationship to weather hazard

(eg. Wind Damage is related to cube of wind speed)

Hazard

Lo

ss

Threshold Point

Non

-Lin

ear

Incr

ease


Knippertz et al (2000)Knippertz et al (2000) Increase of mean and extreme windspeeds in Northern Europe Increase of mean and extreme windspeeds in Northern Europe

and Eastern North Atlantic and Eastern North Atlantic




Leckebusch and Ulbrich (2004)Leckebusch and Ulbrich (2004) Reduction in track density of extratropical cyclones over Reduction in track density of extratropical cyclones over

Europe by 6.9%Europe by 6.9% Increase in track density of intense (95Increase in track density of intense (95thth percentile) percentile)

extratropical cyclone below 60N (up to 20% increase)extratropical cyclone below 60N (up to 20% increase)




Leckebusch and Ulbrich (2004)Leckebusch and Ulbrich (2004) Reduction in track density of extratropical cyclones over Reduction in track density of extratropical cyclones over

Europe by 6.9%Europe by 6.9% Increase in track density of intense (95Increase in track density of intense (95thth percentile) percentile)

extratropical cyclone below 60N (up to 20% increase)extratropical cyclone below 60N (up to 20% increase)

Leckebusch et al (2006)Leckebusch et al (2006) 4 GCMs, 5 RCMs 4 GCMs, 5 RCMs Increasingly frequent intense storms Increasingly frequent intense storms


Using RCM output in the loss model to simulate future Using RCM output in the loss model to simulate future losseslosses



PProviding roviding REREgional gional CClimates for limates for IImpacts mpacts SStudies tudies ((PRECISPRECIS)) driven by ECMWF 40 Year Re-analysis (ERA-40) driven by ECMWF 40 Year Re-analysis (ERA-40)

data data hourly data for 25km gridhourly data for 25km grid



PProviding roviding REREgional gional CClimates for limates for IImpacts mpacts SStudies tudies ((PRECISPRECIS)) driven by ECMWF 40 Year Re-analysis (ERA-40) driven by ECMWF 40 Year Re-analysis (ERA-40)

data data hourly data for 25km gridhourly data for 25km grid

Run PRECIS with boundary conditions from Run PRECIS with boundary conditions from HadAM3P (2070-2100)HadAM3P (2070-2100) ECHAM4 (1960-2100)ECHAM4 (1960-2100)

Run PRECIS under different IPCC Special Report on Run PRECIS under different IPCC Special Report on Emissions Scenarios (SRES) Emissions Scenarios (SRES)

Thank YouThank You

Richard [email protected]

University of East Angliahttp://www.uea.ac.uk/~e470848/

Documents

Windstorms and Insured Loss in the UK RMetS Scottish Centre Postgraduate Student Evening 12 January 2007 Richard Hewston [email protected] University