AIR Worldwide estimates that insured wind losses from Extratropical Cyclone Xaver will range between EUR 700 million and EUR 1.4 billion, with the majority of the losses in Denmark, Germany, and the UK. Losses also occurred in the Netherlands, Belgium, Sweden, and Norway.
Note that these estimates include wind damage to onshore residential, commercial, industrial, and agricultural properties (and their contents), and automobiles; losses due to coastal storm surge flooding are not included in these estimates. ALERT subscribers can download scenarios for Xaver from the ALERT website. Also available is a Touchstone®-ready wind footprint shapefile of the median scenario, as well as similar stochastic event IDs for Europe wind and UK storm surge.
AIR’s industry insured loss estimates reflect:
- Insured physical damage from wind to property (residential, commercial, industrial, agricultural, auto), both structures and their contents
- Losses to insured forestry in Norway and Sweden
AIR’s insured loss estimates do not include:
- Business interruption and additional living expenses (ALE) for residential claims for all modeled countries except the UK (note that clients’ business interruption exposures can be modeled in Touchstone and CLASIC/2™)
- Losses to uninsured properties
- Losses to infrastructure
- Losses from coastal storm surge and inland flooding
- Demand surge (AIR’s demand surge function is not triggered by this event)
The strong extratropical cyclone (ETC) known as Xaver came ashore on Thursday, December 5, in Scotland with wind speeds comparable to those of a Category 1 hurricane. It then headed south and moved across the North Sea to the Netherlands, Denmark, and Germany. Forecasts at that time warned of a very strong wind and coastal flooding event for the UK, the Netherlands, Denmark, and Germany; appropriate warnings were issued by each country's national weather service.
Xaver brought with it a potent combination of hurricane-force gusts, torrential rains, and storm surge, which caused significant travel disruption, power outages, and property damage across parts of the UK, Germany, the Netherlands, Belgium, Denmark, southern Sweden, and Norway.
Reported observation data for the storm include gusts up to 148 km/h and 158 km/h in areas along the Danish and German coasts. Comparisons have been made between Xaver and winterstorms Christian, which struck earlier this year, and Anatol in 1999, which also caused significant losses in Denmark. The wind speeds of Xaver were generally not as intense as either of these storms, however.
Xaver does bear similarities to the destructive February 1, 1953 storm responsible for the North Sea floods, which caused extensive damage from coastal surge in the UK and the Netherlands. On Thursday, December 5, the Environment Agency (EA) warned of the most significant coastal tidal surge since the North Sea floods and Xaver did bring record sea levels, which in places were higher than those seen in 1953.
Xaver was first recognized as a low pressure system off the coast of Greenland. It developed into a powerful extratropical cyclone system as it passed north of Scotland on December 5th. Exhibiting a period of very rapid strengthening known as “explosive cyclogenesis,” the system’s central pressure dropped from approximately 1010 millibars late Thursday to a minimum pressure of 975 millibars 24 hours later. This rapid drop in pressure caused wind speeds to soar, reaching the maximum of “Force 12” on the Beaufort scale in some locations.
From December 5 to December 6, Xaver cut across southern parts of Norway and Sweden and reached its peak intensity over the Baltic Sea with a minimum pressure of 960 mb.
Xaver is the second severe storm of the 2013/2014 European winter storm season. The first, late October’s Christian, also caused significant damage over a large part of Europe. By comparison, the 2012/2013 season was relatively quiet, while the season before that saw a series of storms impacting Europe. This sort of clustering is typical for the region, where seasons with very low activity and corresponding damage can be followed by seasons with very high activity and correspondingly high accumulations of insured losses.
Across the region people are cleaning up from Xaver’s flooding, heavy snow, and wind damage. With more than 500,000 customers without power last week, utility companies are still working to restore service in some areas.
The UK has experienced the brunt of Xaver. During the storm’s passage, strong winds disrupted power to nearly 100,000 homes in Scotland and more than 6,500 in Northern Ireland.
Xaver’s surge caused a difference of 2 meters in water height between the front and back of the Thames Barrier. The barrier was closed for two days, preventing the surge from reaching London as it did in 1953. According to the UK’s Environment Agency, more than 1,400 properties were damaged by flooding along the coast in Yorkshire, Lincolnshire and northeastern Wales and by heavy precipitation that caused rivers to burst their banks. Throughout the region, uprooted trees and fallen branches caused significant disruption to power, communications, and surface travel.
In Germany, the storm closed roads, canceled flights, and shut down the rail system in about one-third of the country. On Friday, local officials reported a surge of 4 meters above sea level in Hamburg. On December 6, the city closed down all 38 of its flood gates. While several streets in Hamburg’s harbor area along the Elbe River were flooded, Germany has significantly improved its flood defenses over the last 50 years.
Despite high winds and improved flood protections across the region, structural damage is expected to be limited from Xaver; reported damage has typically been to the outer building envelope, including roofs, windows, and cladding. However, while the size of individual claims is expected to be relatively low, the overall volume of claims is expected to be significant due to the size of the affected area. Flood and coastal storm surge losses will likely be significant.
Insurance penetration for wind damage is high across all lines of business in Western Europe and Scandinavia. Insurance policy conditions for flood can be more complicated than those for wind damage. Residential flood coverage in Europe varies considerably by country, insurer and location. Flood coverage is included in many commercial policies, although previously flooded properties may be subject to higher premiums and deductibles and/or lower limits.
In Germany and the UK, coverage is provided mainly by private insurers. Flooding is the second highest source of insured loss in Germany, but coverage is typically non-compulsory. In the UK, flood coverage is included in standard policies under an evolving informal public-private partnership, whereby the industry agrees to provide affordable insurance while the government invests in flood defenses. In other European countries, state-backed pools or compensation funds spread the cost among all taxpayers. In the Netherlands, for example, the government is working with the Dutch Insurance Association to set up a flood pool backed by a vast reinsurance treaty, which will be the third largest catastrophe placement to date if realized.
AIR Modeled Losses
The AIR meteorological team has obtained 3-second wind gust data from the METAR and SYNOP networks of more than 1,300 stations across 18 countries. AIR conducted a thorough analysis of the data, including detailed investigations into reported wind speeds in the context of how stations are situated within their local environment, including their elevation, distance to coast, and location.
After carefully examining and processing reported wind gust data in the impacted countries, a set of five scenarios that span the potential range of losses was created using the AIR Extratropical Cyclone Model for Europe.
Based on these simulations, AIR estimates that insured losses from Extratropical Cyclone Xaver will range between EUR 700 million and EUR 1.4 billion. The scenarios, along with a Touchstone-ready wind footprint shapefile of the median loss scenario, are available to ALERT subscribers for download on the Downloads page.
However, it should be noted that there are several sources of uncertainty that may cause losses to go even higher. One is the magnitude of losses to the forestry industry. In addition—and closely related to the widespread uprooting of trees, which in turn brought down power lines across the region—losses to utility companies may be significant. Another unknown is the extent to which power outages may have resulted in business interruption losses.
Note that the five simulated scenarios for use with the AIR Extratropical Cyclone Model for Europe reflect wind damage only. To assist ALERT subscribers in assessing potential losses from coastal surge, AIR has provided four similar stochastic events from the AIR Coastal Flood Model for Great Britain. Although Xaver caused similar surge levels as major historical flood events in 1953 (UK and the Netherlands) and 1962 (Germany), the improved flood protection and the fact that the flood protection was not breached will result in much less flood damage compared to those events
As clients review their estimated losses from this event, AIR recommends the following best practices to enhance the interpretation and communication of results:
- Due to the unique nature of any event, clients should use the ALERT event set to estimate individual company wind losses rather than relying on similar events from the stochastic event catalog;
- Always communicate the range of loss estimates produced by the event sets provided on the ALERT site, not just any single estimate or just the maximum;
- Benchmark estimated losses against losses based on market share information and industry loss estimates when appropriate;
- Present any known issues with exposure data quality that might affect the loss results;
- Disclose any adjustments made to reflect non-modeled costs such as loss adjustment expenses, coastal surge, and inland flooding.