Catastrophe modeling firm AIR Worldwide (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.
AIR today released its “2017 Global Modeled Catastrophe Losses” report, detailing key loss metrics from AIR’s global industry exceedance probability (EP) curve.
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.