AIR Worldwide Provides Annual Global View of Risk
2017 catastrophe events were powerful reminder to insurance industry and stakeholders
BOSTON, Dec. 11, 2017 — Catastrophe modeling firm AIR Worldwide (AIR) today released its “2017 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% aggregate exceedance probability insured loss (or the 100-year return period loss) from catastrophes worldwide is nearly USD 250 billion, and the global insured average annual loss is about USD 80 billion. The 2017 report bases its global loss metrics on perils and regions currently modeled by AIR, including new models and updates released during 2017, as well as databases of property values for more than 100 countries.
The global aggregate average annual loss (AAL) and exceedance probability loss metrics for 2017 include
results from three new models introduced this year (Australia severe thunderstorm, Japan inland flood, and Canada crop hail), and reflect changes in risk as a result of updated models (U.S. earthquake, including tsunami and landslide; Canada earthquake; U.S. hurricane; Australia bushfire; Australia tropical cyclone; Australia earthquake; Japan typhoon; and China MPCI); they also comprise updates to AIR’s industry exposure databases for Australia, Japan, and the U.S.
Average annual insured losses and the metrics from the aggregate insured EP curve—for all regions and perils modeled by AIR—have increased since the first report was published in 2012. The rise reflects both the continued development of properties in at-risk areas as well as the growth in coverage of AIR’s modeled countries and perils; thus the modeled risk profile changes every year to reflect the latest exposures and the increased coverage.
The year opened with U.S. insurers having to deal with large losses from severe thunderstorms in Q1 and Q2. Hurricane Harvey broke the 12-year major U.S. hurricane drought in August and caused record-breaking rainfall and massive flooding in Houston. Harvey was followed closely by two more major hurricanes:Irma, which mainly battered parts of the Caribbean and Florida; and Maria, which ravaged the Caribbean, especially Puerto Rico. In addition, M8.1 and M7.1 earthquakes struck Mexico in September, causing severe damage, and the wildfire siege of California’s wine country in October caused losses greater than many thought possible.
The 2017 report also includes AIR’s presentation of global EP metrics on an insurable basis; insurable loss metrics include all exposures eligible for insurance coverage assuming standard limits and deductibles, regardless of whether they are actually insured. A large difference between insured and insurable losses presents potential growth opportunities for the insurance industry to offer essential protection to vulnerable home and business owners.
The 2017 Global Exceedance Probability report also includes a breakdown of contribution to global AAL by region and peril and key aggregate EP metrics by region.
Download the report here: http://airww.co/GlobalEP2017
About AIR Worldwide
AIR Worldwide (AIR) provides risk modeling solutions that make individuals, businesses, and society more resilient to extreme events. In 1987, AIR Worldwide founded the catastrophe modeling industry and today models the risk from natural catastrophes, terrorism, pandemics, casualty catastrophes, and cyber attacks globally. Insurance, reinsurance, financial, corporate, and government clients rely on AIR’s advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk (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.