Average 1-100 cat loss grows to $271bn: AIR

The average annual insured losses of a 1 in 100-year return period cat event has increased to $270.9 billion in 2018 from $246.9 billion, according to data provider AIR.

The average annual insured losses and the metrics from the aggregate insured exceedance probability (EP) curve—for all regions and perils modelled by AIR—have increased steadily since the first white paper was published in 2012, AIR noted. The rise reflects both increases in the numbers and values of insured properties in areas of high hazard and the inclusion of regions and perils for which new models are now available.

The data also gives an estimate of the protection gap existing in the world. The $270.9 billion aggregate insured loss expected from a cat event with a 100-year return period compares to a $654.2 billion potential insurable loss.

The insurable loss metrics include all exposures eligible for insurance coverage, regardless of whether they are actually insured, AIR explained. They represent the total damage minus deductibles and limits, assuming 100 percent insurance take-up. On a global basis, modelled insurable aggregate average annual loss (AAL) is more than twice as high as the insured AAL, AIR noted.

The global AAL and exceedance probability loss metrics for 2018 include results from three new models introduced this year (European severe thunderstorm, and Southeast European earthquake and flood), and reflect changes in risk as a result of updated models (European extratropical cyclone and US wildfire), AIR said. They also comprise updates to AIR’s industry exposure databases for Europe, and the US.

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