Europe’s insurers face up to €3bn bill for storm Xynthia

This loss forecast does not, however, include business interruption and additional living expenses for affected households, forestry losses, infrastructure losses and losses from non-modelled perils, said the U.S.-based company. Dr. Peter Dailey, Director of Atmospheric Science at AIR Worldwide said: “Comparisons have been made between Xynthia and winter storms Lothar and Martin (1999), and with Klaus, which struck southern France last year. However, the wind speeds of Xynthia were generally not as intense as any of these storms. In fact, Xynthia’s wind speeds were closer to those of Herta, which was one of a devastating series of storms that affected Europe over a five-week period in the winter of 1990, though Herta tracked over a region with a somewhat higher density of properties. Observed losses for Herta are about €2.3 bn trended to today’s exposure.”hideRival catastrophe modelling firm, Risk Management Solutions (RMS), said that total insured losses from Lothar and Martin in France amounted to around €6.5bn. Peak gusts during Lothar were as high as 50 meters per second (180 km/hr) in Paris compared to about 30 meters per second during Xynthia, it said. Over 50 people died in France as a result of Xynthia. A significant amount of the damage and loss of life in France was caused by inadequate flood defences, which either collapsed entirely, or failed to prevent a combination of strong winds and a high tidal surge from breaching them, said RMS. Water therefore rapidly inundated homes in a number of coastal communities, particularly in the Vendee region and further south in the Charente Maritime, including the port of La Rochelle. France was worse hit by the storm but credit rating agency Fitch said that losses are likely to be “material, but manageable” for French insurers. Fitch pointed out that French insurers are likely to benefit from the state-backed national disaster compensation scheme, whereby primary insurers cede uninsurable perils to state-owned Caisse Central de Reassurance (CCR) that is backed by an unlimited guarantee from the French state. “Once France declared the four regions most seriously affected — Vendee, Charente-Maritime, Deux-Sevres and la Vienne — as a natural disaster area, the reinsurance provision became available,” explained Fitch. The credit rating agency said that the majority of the incurred losses were likely to result from flood, and, as such, would be recoverable through the scheme. Vanessa Andre, Fitch Insurance Team Director, said: "Following windstorm Klaus in 2009, some French insurers decided to increase the risk ceded to reinsurers for storm damage. Insurers that have purchased working layer storm reinsurance protection will be better able to support the costs of the Xynthia storm". Allianz said it expects gross claims costs from the storm to cost it in the “low triple-digit million-euro” range. Allianz said that Xynthia was one of the major storms of the last 20 years but fell below Lothar in 1999 and Kyrill that battered the U.K., Netherlands and Germany in 2007 Allianz has said it estimates that between 2010 and 2019 average annual insured losses from weather and climate related disasters will continue to grow to $41bn, from an average of $33bn a year between 1999 and 2008. Winter storm Kyrill caused $5.8bn in insured losses in Europe, according to estimates by Munich Re. That makes it the second-most costly European storm after Lothar, which caused $5.9bn in insured losses in 1999. Johannes Hahn, European Commissioner for Regional Policy, visited France last week to “express European solidarity and discuss possible E.U. action” following the devastation caused by the storms, said the E.C. The visit followed up a meeting in the immediate aftermath of the disaster, held on Monday, March 1 in Brussels between the Commissioner and a French delegation led by Pierre Lellouche, French State Secretary for European Affairs. During the meeting, the French authorities announced their intention to make an application for emergency aid from the European Union Solidarity Fund (EUSF), that can reimburse national public funds spent on the immediate emergency response. The E.C. explained that the French authorities have 10 weeks (until early May) to submit an application. Official damage estimates have not yet been released but French authorities have confirmed their intention to apply for Solidarity Fund aid whether the threshold for a "major disaster" is met or not, said the E.C. “The European Commission will also remain in close contact with the French authorities to help them to prepare their request,” it added. The E.U. aid from the Fund is limited to the financing of emergency operations carried out by the public authorities to deal with non-insurable damage – repair of vital infrastructure, cost of the rescue operations or provision of temporary accommodation, for example. Damage to private property or loss of income cannot be compensated, explained the E.C. The French authorities can also transfer funds from their other E.U. funded programmes to help channel aid towards reconstruction, said the E.C. Under cohesion policy 2007-2013, France has been allocated a total of €14.4bn, partly from the European Union Solidarity Fund (EUSF). The EUSF was set up following the floods which struck central Europe in the summer of 2002. It grants emergency aid to Member States and E.U. accession countries affected by major natural disasters and its annual budget is €1 bn.

Europe’s insurers face up to €3bn bill for storm Xynthia

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