With frigid temperatures and snow expected to fall around the New York City area and other parts of the United States this week, it’s a good time to review how winter storms can impact catastrophe losses.
For insurers, winter storms are historically very expensive and the third-largest cause of catastrophe losses, behind only hurricanes and tornadoes, according to the I.I.I.
Despite below average catastrophe losses overall in 2014, insured losses from winter storms were significant. In fact winter storms in the U.S. and Japan accounted for two of the most costly insured catastrophe losses in 2014.
According to preliminary estimates from sigma, extreme winter storms in the U.S. at the beginning of 2014 caused insured losses of $1.7 billion, above the average full-year winter storm loss number of $1.1 billion of the previous 10 years.
And Aon Benfield’s 2015 Reinsurance Market Outlook notes that a multi-billion-dollar February winter weather insured loss event in Japan was one of the costliest ever for the country’s industry.
Sigma estimates the insured loss payout from that Japan winter storm at $2.5 billion and ranks it as the third costliest insured catastrophe loss of 2014.
What about the year prior?
Winter storms caused $1.9 billion in insured losses in 2013, up dramatically from $38 million in 2012, according to reports from Munich Re.
From 1994 to 2013 winter storms resulted in about $27 billion in insured catastrophe losses (in 2013 dollars), or more than $1 billion a year on average, according to Property Claim Services (PCS).
The good news is that NOAA’s U.S. Winter Outlook predicted early on that a repeat of last year’s winter of record cold and snow is unlikely.
In a release, NOAA’s Climate Prediction Center said: