Key Takeaways
- Co-occuring extreme winds and inland flooding are a significant hazard facing the UK. Research explored co-occuring these hazards and how they could impact insurers.
- Drawing on ~20 million years of statistical simulation, it found 1-in-200 year AEP losses increased around 10%, with solvency capital requirements up 2-10%.
- The research supports the argument that insurers’ model assumptions should account for key dependencies, helping firms to hold sufficient capital for solvency requirements.
Summary
"By better modelling how this relationship might raise insurers’ capital risk we can more firmly argue that insurers’ model assumptions should account for key dependencies between perils."
This blog by CGFI Fellow John Hillier (and authors including Hannah Bloomfield) explores two key co-occuring weather hazards in the UK, and establishes how these combined weather events could impact insurers.
The blog includes findings from the 2023 paper “Co-occurring wintertime flooding and extreme wind over Europe, from daily to seasonal timescales”, from the CGFI research team working on Wind and Flood Damage and European Property Risk.
