“While there has been justifiable concern about extreme event losses over the last few years, outside of 2017, actual global insured losses have been below the modeled long-term average,” said
In this report, AIR has always provided aggregate losses at the 100- and 250-year return period points from the full distribution of potential losses—and it continues to be important to discuss loss metrics in the tail of the distribution. However, given the concerns about the scale of recent catastrophe losses and the ability of the current suite of near-present climate models to reflect extreme loss potential, AIR is also reporting an additional point on the EP curve representing the five percent EP (or 20-year return period) because losses in excess of
“AIR has been an industry leader in understanding the impact of climate change on atmospheric perils for over a decade,” said
The 2021 report also provides estimates of global economic losses from catastrophes, which highlight the persistent insurance protection gap that will limit a country’s ability to recover from a major extreme event. Global economic losses include insured and insurable losses, as well as losses from non-insurable sources, which may include infrastructure and lost economic productivity. Based on its research, AIR has determined that global economic losses are about three times higher than global insured losses on average, when trended to 2020 dollars. Compared to AIR’s modeled global insured average annual loss (AAL) of
On a regional basis, the percentage of economic loss from natural disasters that is insured varies considerably. In
For the first time, this year’s edition of AIR’s Global Modeled Catastrophe Losses paper also includes a section on the
Churney concluded, “Businesses in all industries, as well as governments, are recognizing the need in a post-COVID world to demonstrate their resilience and sustainability to extreme events. Understanding the potential for global financial losses under current conditions is a requisite starting point and AIR’s models have successfully helped the insurance industry do this for over three decades. The global EP curves generated in this report give companies the knowledge with which to benchmark and manage extreme event risk in the near-present climate for more than 110 countries worldwide, and we look forward to partnering with the industry to provide the metrics and solutions that are most useful in also managing long-term climate risk.”
The 2021 edition of AIR’s Global Modeled Catastrophe Losses report bases its global loss metrics on AIR’s latest suite of models, including new models and updates released during 2021, as well as updated industry exposure databases (IEDs). The report excludes losses from AIR’s pandemic, cyber, and casualty models. The report includes 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.
Download the 2021 Global Modeled Catastrophe Losses report here: https://airww.co/3vksGbm
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, supply chain disruptions, terrorism, pandemics, casualty catastrophes, and cyber incidents. Insurance, reinsurance, financial, corporate, and government clients rely on AIR’s advanced science, software, and consulting services for catastrophe risk management, insurance-linked securities, longevity modeling, site-specific engineering analyses, and agricultural risk management. AIR Worldwide, a
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Kevin Long AIR Worldwide 617-267-6645 klong@air-worldwide.com
Source: AIR Worldwide
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