CRESTA index shows major cat losses hold steady

Catastrophe industry losses outside of the US are well below the long-term annual average according to figures from CRESTA, which has released the Q1 2021 update of its index of international catastrophe events.

CLIX, the CRESTA Industry Loss Index, provides industry loss data on international catastrophe events (excluding US) which have generated industry losses in excess of £719m. In the latest update, a total of 32 cat events going back to 2017 were reviewed, 22 of which exceeded the CLIX capturing trigger and were consequently updated.

For 2020, CLIX is currently tracking seven cat events which generated a combined industry loss of £6.8bn, a figure well below the long-term annual average. This benign international cat loss activity continued into Q1 2021 with only two events outside the US categorised as having the potential to exceed a £719m industry loss. These include the Fukushima Mw7.0 earthquake which occurred in Japan in February and the floods and storms which affected the Australian states of New South Wales and Queensland in March.

The 21-year time series, corrected for changes in insured values and asset prices, reveals that the annual average loss from major international catastrophe events was £11.7bn (£9.9bn excluding the Tohoku earthquake of 2011). During this period, industry event losses of £1.4bn or greater occurred on average twice a year, while in 2020 based on current information no international cat events have exceeded this loss level. Further actuarial analysis of the entire CLIX loss list also reveals that a £3.6bn industry event loss can be expected to occur approximately once every 1.75 years, while a £7.2bn loss may be reached or exceeded approximately once every four years.

Matthias Saenger, technical manager of CLIX, said: “These results illustrate the actuarial analysis potential created by the CLIX Loss List, including the technical pricing of industry-loss-based risk transfer products. Losses can be analysed by geography, time, or natural peril, with the insights gained applied to pricing and reserving activities, as well as capital management and reinsurance or retrocession buying.”

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