windstorms and insurance rmets student conference 21-23 august 2006 richard hewston...
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Windstorms and Insurance Windstorms and Insurance
RMetS Student Conference 21-23 August 2006
Richard [email protected]
University of East Angliahttp://www.uea.ac.uk/~e470848/
Supervisors: Dr Stephen Dorling Dr David Viner
Funding: Worshipful Company of Insurers
Worldwide Natural Worldwide Natural CatastrophesCatastrophes
Increasing economic and insured loss Since 1970, of the most expensive 40 insured losses, 33 were
weather related with 29 windstorm related. Successive record annual insured losses in 2004 and 2005Successive record annual insured losses in 2004 and 2005
Worldwide Natural Worldwide Natural CatastrophesCatastrophes
Increasing economic and insured loss Since 1970, of the most expensive 40 insured losses, 33 were
weather related with 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 demographic shifts and well as natural factors.
Weather Related Insured Loss Weather Related Insured Loss in the UKin the UK
~30% of loss from subsidence~30% of loss from subsidence ~70% associated with storms~70% associated with storms
Weather Related Insured Loss in the UK
0
500
1000
1500
2000
2500
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Year
£m
*Jan-June 2005 only
Weather Related Insured Loss Weather Related Insured Loss in the UKin the UK
~30% of loss from ~30% of loss from subsidencesubsidence
~70% associated with ~70% associated with stormsstorms
Weather Related Insured Loss in the UK
0
500
1000
1500
2000
2500
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Year
£m
*Jan-June 2005 only
Domestic claims make up 70-85% of total losses
Business Interruption accounts for ~12% of commercial claims (~3% of total weather related insured loss)
Weather Related Insured Loss Weather Related Insured Loss in the UKin the UK
Insured Loss in the UK
0
100
200
300
400
500
600
700
800
1991
Qtr
1
1991
Qtr
3
1992
Qtr
1
1992
Qtr
3
1993
Qtr
1
1993
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3
1994
Qtr
1
1994
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3
1995
Qtr
1
1995
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3
1996
Qtr
1
1996
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3
1997
Qtr
1
1997
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3
1998
Qtr
1
1998
Qtr
3
1999
Qtr
1
1999
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3
2000
Qtr
1
2000
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3
2001
Qtr
1
2001
Qtr
3
2002
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1
2002
Qtr
3
2003
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1
2003
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3
2004
Qtr
1
2004
Qtr
3
2005
Qtr
1
Date
Insu
red
Lo
ss (
£m)
4th quarter 2000 - Wettest Autumn for more than 200 years
Weather Related Insured Loss Weather Related Insured Loss in the UKin the UK
Insured Loss in the UK
0
100
200
300
400
500
600
700
800
1991
Qtr
1
1991
Qtr
3
1992
Qtr
1
1992
Qtr
3
1993
Qtr
1
1993
Qtr
3
1994
Qtr
1
1994
Qtr
3
1995
Qtr
1
1995
Qtr
3
1996
Qtr
1
1996
Qtr
3
1997
Qtr
1
1997
Qtr
3
1998
Qtr
1
1998
Qtr
3
1999
Qtr
1
1999
Qtr
3
2000
Qtr
1
2000
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3
2001
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1
2001
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3
2002
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1
2002
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3
2003
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1
2003
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3
2004
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1
2004
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3
2005
Qtr
1
Date
Insu
red
Lo
ss (
£m)
4th quarter 2000 - Wettest Autumn for more than 200 years 1st quarter 2005 due largely to windstorm Erwin
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 windspeeds of Sweden recorded windspeeds of 33m/s inland, resulting in 33m/s inland, resulting in unprecedented damage to the unprecedented damage to the forest industry (£1.6-2.3bn)forest industry (£1.6-2.3bn)
Industry wide, the figure for total Industry wide, the figure for total insured losses relating to insured losses relating to Windstorm Erwin stands at Windstorm Erwin stands at £1.1bn£1.1bn
Wind at altitude of 9km for 1800GMT on 7th January, 2005
Source: Danish Met Institute
Modelling Windstorm LossModelling Windstorm Loss
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 – windstorm characteristics
Modelling Windstorm LossModelling Windstorm Loss
Crichton, D. (1999). The Risk Triangle, Natural Disaster Management. Journal, Ingleton. London, Tudor Rose: 102-103.
Windstorm damage is the result of wind loads exceeding the resistance of the structure, affecting parts of the building such as roofs, envelopes and
openings. 79% of all damage since 1970
is related to roofs
Important factor is Vulnerability
Different regions have different building standards
Risk Risk TriangleTriangle
Source: Crichton (1999)
Exposure – position, orientation, regional terrain, topography
Vulnerability - shape, constructional details and state of maintenance (preparedness)
Hazard – windstorm characteristics
Modelling Windstorm LossModelling Windstorm Loss
Following Klawa and Ulrbich Following Klawa and Ulrbich (2003)(2003)
Windstorm loss modelling Windstorm loss modelling using using wind gust speeds from a wind gust speeds from a
network of UK Met Office network of UK Met Office observing stations observing stations
various socioeconomic various socioeconomic data sets which help to data sets which help to quantify vulnerabilityquantify vulnerability
Claims data from insurers Claims data from insurers for verificationfor verification
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
Modelling Windstorm LossModelling Windstorm Loss
10°0'0"W12°0'0"W
8°0'0"W
8°0'0"W
6°0'0"W
6°0'0"W
4°0'0"W
4°0'0"W
2°0'0"W
2°0'0"W 0°0'0"
0°0'0"
2°0'0"E
2°0'0"E
4°0'0"E
4°0'0"E
6°0'0"E
50°0'0"N50°0'0"N
52°0'0"N52°0'0"N
54°0'0"N54°0'0"N
56°0'0"N56°0'0"N
58°0'0"N58°0'0"N
60°0'0"N
60°0'0"N
Maximum windspeeds, not Maximum windspeeds, not mean windspeeds, closely mean windspeeds, closely related to damage related to damage (eg.Dorland et al (2000), (eg.Dorland et al (2000), Hanson et al (2004)).Hanson et al (2004)).
Daily maximum gust speed Daily maximum gust speed and direction are available and direction are available from the British Atmospheric from the British Atmospheric Data Centre Data Centre
The 98th percentile value of The 98th percentile value of the daily maximum gust the daily maximum gust speeds used, incorporating speeds used, incorporating “wind climate”“wind 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
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 “Wealth indicators”indicators”
10°0'0"W
8°0'0"W
8°0'0"W
6°0'0"W
6°0'0"W
4°0'0"W
4°0'0"W
2°0'0"W
2°0'0"W 0°0'0"
0°0'0"
2°0'0"E
2°0'0"E
4°0'0"E
4°0'0"E
6°0'0"E
50°0'0"N 50°0'0"N
52°0'0"N 52°0'0"N
54°0'0"N 54°0'0"N
56°0'0"N 56°0'0"N
58°0'0"N 58°0'0"N
60°0'0"N 60°0'0"N
Household Density (2000)
Modelling Windstorm LossModelling Windstorm LossClaims Claims DataData
Ecclesiastical Insurance Ecclesiastical Insurance GroupGroup
Norwich Union (via loss Norwich Union (via loss adjustors Cunningham adjustors Cunningham Lindsey)Lindsey)
Claims data for domestic Claims data for domestic properties suffering losses properties suffering losses associated from windstormassociated from windstorm
Modelling Windstorm LossModelling Windstorm LossClaims Claims DataData
Ecclesiastical Insurance Ecclesiastical Insurance GroupGroup
Norwich Union (via loss Norwich Union (via loss adjustors Cunningham adjustors Cunningham Lindsey)Lindsey)
Claims data for domestic Claims data for domestic properties suffering losses properties suffering losses associated from windstormassociated from windstorm
10°0'0"W
8°0'0"W
8°0'0"W
6°0'0"W
6°0'0"W
4°0'0"W
4°0'0"W
2°0'0"W
2°0'0"W 0°0'0"
0°0'0"
2°0'0"E
2°0'0"E
4°0'0"E
4°0'0"E
6°0'0"E
50°0'0"N 50°0'0"N
52°0'0"N 52°0'0"N
54°0'0"N 54°0'0"N
56°0'0"N 56°0'0"N
58°0'0"N 58°0'0"N
60°0'0"N 60°0'0"N
Claims Associated with Windstorm Erwin (Jan
2005)
Modelling Windstorm LossModelling Windstorm Loss
10°0'0"W
8°0'0"W
8°0'0"W
6°0'0"W
6°0'0"W
4°0'0"W
4°0'0"W 2°0'0"W
2°0'0"W
0°0'0"
0°0'0"
2°0'0"E
2°0'0"E
4°0'0"E
50°0'0"N50°0'0"N
52°0'0"N52°0'0"N
54°0'0"N54°0'0"N
56°0'0"N
56°0'0"N
58°0'0"N
58°0'0"N
60°0'0"N
60°0'0"N
Windstorm ErwinMax Gust Speeds (normalised to 98th
percentile value)10°0'0"W
8°0'0"W
8°0'0"W
6°0'0"W
6°0'0"W
4°0'0"W
4°0'0"W
2°0'0"W
2°0'0"W 0°0'0"
0°0'0"
2°0'0"E
2°0'0"E
4°0'0"E
4°0'0"E
6°0'0"E
50°0'0"N 50°0'0"N
52°0'0"N 52°0'0"N
54°0'0"N 54°0'0"N
56°0'0"N 56°0'0"N
58°0'0"N 58°0'0"N
60°0'0"N 60°0'0"N
Modelling Windstorm LossModelling Windstorm LossWindstorm Erwin
Predicted insured loss10°0'0"W
8°0'0"W
8°0'0"W
6°0'0"W
6°0'0"W
4°0'0"W
4°0'0"W 2°0'0"W
2°0'0"W
0°0'0"
0°0'0"
2°0'0"E
2°0'0"E
4°0'0"E
50°0'0"N50°0'0"N
52°0'0"N52°0'0"N
54°0'0"N54°0'0"N
56°0'0"N
56°0'0"N
58°0'0"N
58°0'0"N
60°0'0"N
60°0'0"N
Modelling Windstorm LossModelling Windstorm LossWindstorm Erwin
Predicted insured loss10°0'0"W
8°0'0"W
8°0'0"W
6°0'0"W
6°0'0"W
4°0'0"W
4°0'0"W 2°0'0"W
2°0'0"W
0°0'0"
0°0'0"
2°0'0"E
2°0'0"E
4°0'0"E
50°0'0"N50°0'0"N
52°0'0"N52°0'0"N
54°0'0"N54°0'0"N
56°0'0"N
56°0'0"N
58°0'0"N
58°0'0"N
60°0'0"N
60°0'0"N
10°0'0"W
8°0'0"W
8°0'0"W
6°0'0"W
6°0'0"W
4°0'0"W
4°0'0"W
2°0'0"W
2°0'0"W 0°0'0"
0°0'0"
2°0'0"E
2°0'0"E
4°0'0"E
4°0'0"E
6°0'0"E
50°0'0"N 50°0'0"N
52°0'0"N 52°0'0"N
54°0'0"N 54°0'0"N
56°0'0"N 56°0'0"N
58°0'0"N 58°0'0"N
60°0'0"N 60°0'0"N
Actual insured loss
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.
Risk Risk TriangleTriangle
Source: Crichton (1999)
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)
Damage functions NOT a linear relationship to weather hazard
(eg. Wind Damage is related to cube of wind speed)
Climate Change and Future Climate Change and Future LossesLosses
Using RCM output in the loss model to simulate future losses
Climate Change and Future Climate Change and Future LossesLosses
Using RCM output in the loss model to simulate future losses
Providing REgional Climates for Impacts Studies (PRECIS) driven by ECMWF 40 Year Re-analysis (ERA-40) data hourly data for 25km grid for 25km grid
Climate Change and Future Climate Change and Future LossesLosses
Using RCM output in the loss model to simulate future losses
Providing REgional Climates for Impacts Studies (PRECIS) driven by ECMWF 40 Year Re-analysis (ERA-40) data hourly data at 25km at 25km22
Run PRECIS with boundary conditions from HadAM3P (2070-2100) Max Planck Institute ECHAM4 global climate model
Run PRECIS under different IPCC Special Report on Emissions Scenarios (SRES)
Thank YouThank You