With so much potentially at stake, project developers must consider and build for events that may not even exist today.
of 2018 global insured losses incurred in the United States
2018 presented an increased catastrophe loss year...
AON 2018
the insured cost of weather disasters in 2018 - fourth costliest year on record
2017
54.9%
Primary peril
Secondary effects of primary perils
Secondary peril
29.3%
7.2%
49.7%
2018
Swiss Re Institute
21%
Breakdown of insured losses each year
37.9%
(Swiss Re Institute 2018)
While primary perils and their respective impacts are well understood, secondary perils are now causing more physical and financial damage. So much so that in 2018, over 60% of all insurance losses from natural catastrophe events resulted from so-called secondary perils.”
WILDFIRES
As temperatures continue to rise, droughts are becoming more intense and are unfortunately lasting longer.
(UCS)
In the western U.S., the impact of climate change is already being felt, with average annual temperatures having increased by 1.9°F since 1970, about twice the pace of the global average warming.”
1.8
AON
Carr Fire
15
4.5
Billion-dollar wildfires (2018)
Such conditions are primed for wildfires to ignite and spread, culminating in the single largest insurance loss-event of 2018, the Camp Fire in California.
5.8
Camp Fire
The biggest wildfires of 2018 in the U.S., by insured and economic loss
12
1.3
Woolsey Fire
Statista
10
UK
40
2,176
In 2018, northwest Europe also saw a surge in wildfires (2018)
Latvia
1,593
454
Germany
3,113
18,761
And as temperatures rise elsewhere, these statistics from the western U.S. could easily become a reality for other countries too.
13,888
Sweden
Estimated number of hectares burnt, by country
HAIL
The larger the hailstone, the greater its potential to do serious damage. Although they are typically localized events, severe hailstorms can still cause losses in the billions.
of global insured losses for SCS peril have been generated by the U.S. since 1990, accounting for nearly $300 billion
The U.S. takes the lead for severe weather reports and insured losses
of global insured losses for SCS peril have been generated by the EMEA region since 1990, equivalent to $57 billion
SCS peril - Severe Convective Storms peril
AON 2018
Beyond the U.S., a catastrophic hail event struck in Sydney, Australia in December 2018, where baseball-sized hail caused extensive damage to vehicles, homes, and businesses. Tens of thousands of insurance claims cost insurers well into the hundreds of millions (USD).
most costly insured loss event in the world that year and demonstrating that it is becoming an increasingly costly peril
the amount the Colorado hailstorm of summer 2018 cost insurers, making it the...
While changes in climate certainly have a role to play in the rising occurrences of damaging hailstorms, the increasing loss potential of such events can also be attributed to growing development in exposed areas and the increase of modern structures such as solar panels.”
And we can attribute many of these losses to a rising number of severe storms in recent decades
508
Colorado
Nebraska
Kansas
South Dakota
Texas
332
309
Top U.S. states for major hail events, by number in 2018
493
FLOODS
Across the globe, extreme rainfall events have surged more than 50% this decade and are now occurring at a rate four times higher than in 1980. Munich Re 2018
all $ amounts shown are USD
the increase in the frequency of category 4 and 5 hurricanes predicted over the next 80 years
the amount the U.S. flood plains are expected to grow by the end of the century
And the forecast for wet and windy weather shows little sign of stopping:
2017
2016
NCEI 2019
Swiss Re institute 2018
Houston’s associated loss due to flooding
associated insured losses reached $1.6 billion
Hurricane Harvey was the wettest storm in 70 years, causing massive flooding and losses for Houston again
“Houston, we have a problem”
the losses from hurricane Harvey
associated insured losses reached $1.1 billion
2015
China (Jul 2016)
3.4K
Thailand (Aug-Nov 2011)
10K
20K
Most costly floods to the insurance industry worldwide from 2011 to 2018
2.4K
Outside of the U.S., Asia is by far the worst affected by extreme flooding
Munich Re 2019
9.5K
Japan (Jul 2018)
2.9K
43K
U.S. (Aug 2016)
0.52K
12K
Central Europe (Jun 2013)
16K
NRDC.org
Rapid urbanization and changes in climate have resulted in a concerning combination, coupling increased torrential rainfall with reduced avenues for water to discharge. The city of Houston is a prime example of this. During the past 15 years the city’s paved areas have expanded across flood plains, meaning water that would have once been absorbed in the ground now runs and rises along hard surfaces. As a result, the area suffers regularly from rain-induced flood events.”
Be prepared
As challenging as the climate crisis will be to overcome, the renewable energy sector is at the forefront of this change, and the re/insurance industries are well-placed to help. Considering the risk to assets that secondary perils now present, it is
extremely important that project developers think about mitigating possible future risks as well as current ones.
Click here for more information on tropical storm preparedness
https://www.axiscapital.com/insurance/global-energy/global-renewable-energy
