Hail and other severe weather perils have been causing increasing amounts of insurance and reinsurance market loss over the last few years.
There have been repeated years of damaging hail impacts across countries such as France, Germany and Italy, some of which have driven losses through to the reinsurance layer of the industry.
It's the increasing frequency that has made these challenging in the space and like in the United States reinsurance capital has retrenched higher, to avoid more of these types of losses, while also providing less sideways or aggregate protection as well.
Having analysed the European Severe Weather Database, Chaucer said that the number of hailstorms has jumped 104% to 11,808 storms last year (year-ending June 30th 2024), up from 5,785 in 2022/23.
Chaucer has released its analysis in the context of rising impacts to solar energy installations, but it is an appropriate reminder for the global reinsurance industry that what were so-called secondary perils, such as hail, are increasingly primary all over the world.
"Hailstorms in Europe have increased 267% in the past five years due to climate change, up from 3,217 hailstorms in 2019/20. This rise in the frequency of hailstorms is expected to continue as extreme weather events become more regular around the globe," Chaucer explained.
Adding that, "Hailstorms are also increasingly severe across regions like North America and Europe. Hail Alley - stretching from Wyoming to Texas in the U.S. - is well known for producing unnaturally large hailstones. European countries including Italy and Germany are also reporting larger hail stones up to 10 cm in diameter."
Hail events have been influencing reinsurance buying habits in Europe, as some carriers have been retaining more losses from perils such as this.
Severe weather perils, such as hail, are likely to be a key topic of discussion through the reinsurance renewal negotiations towards the end of year.
Alex Nelson, Class Underwriter at Chaucer, commented, "Hailstorms are increasingly frequent and therefore increasingly damaging.
"With limited cover from standard policies, operators of solar installations often have to pick up a large percentage of the cost of damage by a hailstorm. That's naturally going to slow the growth of solar energy production in those areas where hailstorms occur.
"With the intensity and volume of hailstorms likely to continue increasing it is imperative solar farms invest in new technology and ensure they are financially protected from damage."
Source link