Losses from secondary perils surpassing those
from hurricanes
WASHINGTON, Aug. 13,
2024 /PRNewswire/ -- Insured losses from severe
convective storms in the first half of 2024 represent a majority of
worldwide catastrophe losses. Notably, insurance payouts for Severe
Convective Storms (SCS) have increased in the United States, which poses a particular
threat to insurers and policyholders due to a lack of reinsurance
protection for such losses, according to The Demex Group.
Aon's H1 2024 Global Catastrophe Recap shows U.S. SCS insured
losses totaled $39 billion in the
first half. Four SCS events in that period generated insured losses
totaling nearly $15 billion.
"Losses from severe convective storms continue to be significant
threats, not only to property owners but also to their insurance
companies," said Bill Clark, CEO of
Demex, a risk analytics and intelligence company offering
reinsurance solutions for Severe Convective Storms. "In 2023,
dozens of insurers in the U.S. saw their ratings downgraded, and
four companies became insolvent due to financial losses stemming
from SCS."
Traditional reinsurance, a form of capital known as insurance
that insurance companies buy, is available for catastrophe losses
such as hurricanes and earthquakes but rarely for SCS. SCS, hail,
extreme heat and cold, and flooding are secondary perils, which
have been increasing in frequency and severity, Clark noted.
"An accumulation of losses from secondary perils is an
existential threat to insurers – and can reduce consumers' access
to insurance – because aggregate reinsurance policies for these
events are generally not available," Demex's CEO explained.
Demex has developed a sophisticated parametric reinsurance
solution - called Retained Climate Risk Reinsurance (RCR Re) - for
secondary perils that enables insurers to protect their balance
sheets. In partnership with reinsurance brokers and reinsurance
companies, Demex arranges coverage for losses above a specified
threshold.
"Demex assesses the likelihood of losses from secondary perils
by analyzing the ingredients that create Severe Convective Storms,"
Clark said. "We do this by using historical claims and verified
weather data to estimate the losses an insurer may experience.
Munich Re's analysis shows that in the US, severe thunderstorms
have already caused more than $34
billion of insured damages in the first six months of the
year, and we expect losses from SCS and other secondary perils to
continue at a strong pace."
About Demex
The Demex Group is a technology-enabled risk analytics and
intelligence company that serves the global insurance industry.
Demex focuses on facilitating financial protection for secondary
perils, which include severe convective storms, hail, extreme heat
or cold, and flooding. These events collectively have surpassed
catastrophes such as hurricanes and earthquakes as the leading
cause of loss for insurance companies.
Demex is a market-maker for a class of risk that is surpassing
catastrophe losses – a cluster of losses from secondary perils that
threatens not only insurers' annual earnings but also the
sustainability of their businesses.
For more information, please visit Demex.
Media Contact: Nick Hill
Nick@princecomms.com
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SOURCE The Demex Group