AIR Worldwide Estimates Global Catastrophe Loss Potential
Findings highlight significant gap between insured and economic losses from disasters
BOSTON, Sept. 15, 2015 - Catastrophe modeling firm AIR Worldwide(AIR) today released its "2015 Global Modeled Catastrophe Losses"report, detailing key loss metrics from AIR's global industry exceedance probability (EP) curve. Based on the report, AIR estimates that the 1 percent aggregate exceedance probability insured loss (or the 100-year return period loss) is approximately$233 billion USD, and the global insured average annual loss is about $74 billion USD. The 2015 report bases its global loss metrics on perils and regions currently modeled by AIR, including new models and updates released during 2015, as well as updated industry exposure databases. AIR Worldwide is a Verisk Analytics (Nasdaq:VRSK) business.
"AIR's global industry exceedance probability curve can be used to obtain a comprehensive and meaningful view of potential losses and help put actual losses into context," said Bill Churney, chief operating officer, AIR Worldwide. "This is the real value of having credible catastrophe models across multiple perils and regions that can be analyzed together seamlessly - to better anticipate possible global outcomes, including future catastrophes and future years that may produce losses exceeding any historical amounts."
Unique to the 2015 report is AIR's presentation of global EP metrics on both an insured and insurable basis, where insurable loss metrics include all exposures eligible for insurance coverage assuming standard limits and deductibles, regardless of whether they are actually insured. Also newly added in the 2015 report are estimates of global economic average annual losses from catastrophes, which can often vastly exceed insured losses depending on the region and peril.
"By providing both global insured and insurable loss estimates based on the EP curve, the gap between covered and eligible exposures becomes evident, suggesting opportunities for the insurance industry to offer essential protection to vulnerable home and business owners, in addition to avenues of potential business growth," commented Churney. "While this gap is very pronounced in Asia, a gap remains even in the U.S., where a significant portion of earthquake and flood risk is not insured. Economic loss estimates can be used to facilitate public risk financing and the development of regional resiliency plans to help societies better prepare for catastrophes and reduce the ultimate costs."
Churney concluded, "The ability to take a comprehensive global view can give insurers and reinsurers greater confidence that the risk they have assumed is risk they can afford to take. The global EP curves generated with AIR software can give companies the knowledge with which to benchmark and better manage catastrophe risk in more than 90 countries worldwide."
A full version of the report can be found on AIR Worldwide's website at:
About AIR Worldwide
AIR Worldwide (AIR) is the scientific leader and most respected provider of risk modeling software and consulting services. AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 90 countries. More than 400 insurance, reinsurance, financial,corporate, and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities,detailed site-specific wind and seismic engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk Analytics (Nasdaq:VRSK) business, is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information,please visit www.air-worldwide.com.