Effects of Recent Weather Extremes on the Insurance Industry: Major Implications for the Atmospheric Sciences

Abstract

Frequent and extremely damaging severe weather conditions in the United States during 1991-94 caused $40 billion in insured losses, creating major impacts and eliciting diverse responses in the weather insurance industry. Population, one reason for the growing national sensitivity to storm damage, explained much of the increase in the number of catastrophes (property losses > $10 million) as well as the increases in the amount of losses. The largest increases in storms occurred in areas experiencing the greatest population growth (west, southwest, south, and southeast). Shifts in atmospheric variables (particularly in the frequency of extratropical cyclones) explained most of the 1949-94 fluctuations found in the intensity of catastrophic storms (losses divided by storm frequency). The property-casualty sector raised rates, made major changes in insurance availability in high-risk areas, tightened underwriting restrictions in hurricane-prone areas, and is making extensive assessments of weather risks. The reinsurance industry raised rates up to 200%, sought and received funds from the financial markets, and developed new firms. However, some existing firms also withdrew from the marketplace. Crop losses led to major changes in the nation's crop insurance program. The property casualty and reinsurance sectors, which experienced the greatest losses, have gained a greater appreciation of the need to incorporate atmospheric data, information, and expertise into their operations. Assessment of the problems created by recent weather extremes and possible solutions identified ways that the atmospheric sciences community and industry can work together more effectively to deal with future climate conditions and weather extremes.

No upward trend in normalised windstorm losses in Europe: 1970–2008

“…The purpose of this exercise is to put all losses on a common basis that is reflective of the impact that historical events might produce if they were to recur under current (2008) societal conditions (Changnon et al, 1997;Pielke Jr. and Landsea, 1998;Pielke Jr. et al, 2008;Barredo, 2009). The conceptual approach follows that employed in previous studies in adjusting for changes in inflation, population and per capita wealth since the original event (Pielke Jr. and Landsea, 1998;Crompton and McAneney, 2008;Barredo, 2009).…”

“…The conceptual approach follows that employed in previous studies in adjusting for changes in inflation, population and per capita wealth since the original event (Pielke Jr. and Landsea, 1998;Crompton and McAneney, 2008;Barredo, 2009). As information for the changes in wealth in exposed areas is rarely available, it is often necessary to use proxies in order to account for its influence (Changnon et al, 1997;Changnon and Changnon, 1998;Pielke Jr. and Landsea, 1998;Pielke Jr. and Downton, 2000;Changnon, 2003;Crompton and McAneney, 2008;Pielke Jr. et al, 2008;Barredo, 2009).…”

Extreme Precipitation Events in Serbia: Defining the Threshold Criteria for Emergency Preparedness

“…Many studies have been carried out regarding the impact of these weather phenomena upon different aspects of the environment and human activity within modern climate changes [1][2][3][4][5][6][7][8]. These studies suggest that climate change has a tendency to increase the frequency of extreme precipitation, thus causing natural hazards.…”

Comments

“…The primary reasons for these increases lie with underlying societal trends-demographic, economic, political, social, etc.-that shape our vulnerability to impacts (Adger et al 2003;Kunkel et al 1999;Smit et al 2000;Changnon et al 1997;Easterling et al 2000;Changnon 2003;Pielke and Downton 2000;Pielke and Landsea 1998;Raghavan and Rajesh 2003).…”