Record losses on the scale experienced by the industry in 2011 could occur as regularly as every 15 years, risk modelling business AIR Worldwide has claimed in a report. What is more, the industry should brace itself for losses on a potentially even greater scale.
Insured losses from global natural catastrophes exceeded $110 billion in 2011, the second highest figure ever recorded. But AIR claims there is a 7 percent probability of losses on this scale occurring in any given year from now on.
The report, Taking a Comprehensive View of Catastrophe Risk Worldwide, also examined scenarios that could result in much larger worldwide insurance losses. It estimates that the 100-year return period loss is just over $100 billion – a figure that could be driven by an active and severe US hurricane season or by a combination of different perils in different regions, as was the case in 2011.
AIR estimates the average annual loss from natural catastrophes is $59 billion, in line with global catastrophes losses from 2012, which are estimated to be around $58 billion.
“Many in the industry were surprised at the aggregation of losses in 2011, especially since we didn’t have a major US hurricane,” said Bill Churney, senior vice president, AIR Worldwide. “However, despite the significance of the toll in 2011, insured losses fell well within the range for which global insurers and reinsurers should be prepared. It’s our hope that the report will help companies increasingly concerned about escalating levels of loss to better understand and own their risk.”
AIR Worldwide, Insurance, Losses, Risk modelling