Hail and windstorms cause multi-billion global economic loss in June; draught may be this summer's nightmare for European farmers

Overall, extreme weather events led to a multi-billion dollar economic toll, of which insurers have to pay more than USD 3 billion in claims for US losses alone, the latest edition of Aon's monthly Global Catastrophe Recap report shows. Economic losses in the Central and South-Eastern Europe amounted some hundred million USD, but weather continued also in July, adding extra costs which may also amount to significant sums.

No less than eight periods of severe thunderstorms led to widespread convective storm and flash flood damage across the eastern two-thirds of the United States during June, with the vast majority of the damage resulting from large hail and damaging straight-line winds. Meanwhile, major severe weather events were also recorded in parts of Western and Central Europe - notably Germany and France - as well as in Brazil, Canada, India, and China.

In comparison with the US, the extend of the European losses seems by far less impressive. Yet, considering weather events' evolution in July and the current weather forecasts, it seems that June was only the preview of a stormy summer. One should also take into consideration the significant losses caused by drought, especially in the North-Western Europe, also in June.

According to Aon, the main severe weather episodes affecting Europe in une were:

  • during the first week of June: widespread wind, hail and isolated flood damage across several European; intense, but isolated rainfalls caused numerous instances of pluvial flooding across Germany, Netherlands, Luxembourg, Czech Republic, Austria and elsewhere. Damage from hail was less significant. Total economic and insured losses were expected to reach into the tens of millions EUR.
  • from June 8-13: hailstorm in Slovenia and Croatia on June 8, which produced hailstones larger than 10 centimeters (3.9 inches); multiple small-scale pluvial flooding events in France, Germany, Austria, Czech Republic, and Switzerland; flooding and hail in Serbia causing an estimated economic loss of USD 60 million (June 13). Aggregated losses related to severe weather are expected to reach into the hundreds of millions EUR.
  • June 27-29: heavy rainfall and severe thunderstorms led to widespread flooding across parts of Bulgaria, Romania and Ukraine. Total economic losses were estimated to reach into the millions EUR. The phenomena also continued in July.
Although not included in the Aon report, the severe draught affecting the North-Western Europe is worth mentioning. According to the local press reports, the UK is facing a heatwave that may prove worse than the sweltering summer of 1976. The last week of June saw record high temperatures in several regions of the country. No nationwide hosepipe ban is currently in effect, but a ban was introduced in Northern Ireland last week. Meanwhile, farmers in Scotland have already warned of an impending crisis amid drought conditions, many of them already selling cattle because the lack of rain left them unable to make enough silage to see them through the winter.

On the continent, The Baltic states are also confronted with the draught effects, the most affected being Latvia and Lithuania, where draught has lasted for more than two months. On 26 June the Latvian Crisis Management Council has declared the situation as a nationwide natural disaster, a status which doesn't provide for compensations payments to farmers, but helps them dealing with given circumstances, as penalties for non-performance regarding the EU-funded projects or bank loan payments etc. On the other hand, according to Lithuanian officials, the country's grain and vegetable farmers have already recorded significant losses as "at least 30 percent of the harvest has already been lost."

Poland is also facing a severe draught. According to the agriculture ministry, of country's roughly 2,500 local government districts, 2,300 have felt the effects of the drought, a third of Poland's crops being affected. The drought in "June is worse than in the worst dry years of 2006 and 2015, so losses may turn out to be very significant," a representative of the Polish Executive said.

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

Share |

Related articles

March 2019 analysis on Brexit impact

A New Financial analysis found that 275 firms are moving or have already moved their businesses, staff and assets from Britain to the EU because of Brexit. The report shows Dublin, Luxembourg and Paris were the common choice, while Frankfurt was preferred by banks or investment banks.

2019-03-14

BI non-physical losses: the UK solution

With the Royal Assent being given to the Counter-Terrorism and Border Security Bill 2018 - allowing Pool Re to cover non-physical losses incurred following a terrorist attack -, the British market has set a precedent at global level, by finding solving a challenging issue born by the changed character of the terrorist attacks of the recent years.

2019-02-14

WEF's global Top 5 most concerning trends 2019: changing climate, cyber dependency and increasing social disparities and national sentiment

Rising geopolitical and geo-economic tensions are the most urgent risk in 2019, while environmental degradation is the long-term risk that defines our age, with four of the top five most impactful global risks in 2019 related to climate. Rapidly evolving cyber and technological threats are the most significant potential blind spots; we still do not fully appreciate the vulnerability of networked societies. These are some of the main conclusions of the World Economic Forum's Global Risks Report 2019.

2019-01-18

Global economic growth is solid but slowing, and emerging Asia will continue to power the insurance market, sigma says

Global premiums are forecast to grow by around 3% annually in 2019 and 2020, mostly driven by the high growth rates in emerging Asia which may be as by three times more than the global average. The economic power shift from west to east will drive insurance sector development to 2020 and beyond. Expanding the boundaries of insurability for corporate intangible assets will be another main growth area for insurers

2018-11-22

Insurance, a key player in building resilience

"The frequency of natural disasters is increasing, and the damage they cause will be greater as the world population becomes more urban and concentrated in areas prone to catastrophe," one of the latest analysis published by Aon under the Global Insurance Market Opportunities titles sates.

2018-11-05

ON THE MOVE

Bulgaria: Boiko ATANASSOV appointed as FSC's head

The Parliament of the Republic of Bulgaria appointed Boiko ATANASSOV as Chairperson of the Financial Supervision Commission (FSC) on March 15, with 134 votes in favour, none opposed or abstained.

21.03.2019

TOP EVENT

Climate and cyber: two Cs with catastrophic potential and the insurance business - under debate in Vienna, on April 9

10 years after its inception, the Romanian mandatory dwelling insurance system has progressed and PAID, the pool underwriting and managing the mandatory policies is a strong and financially sound institution. "We are currently managing a reinsurance program worth EUR 920 million, with a pool of excellent reinsurers, more than half of them rated AA+, while the company's solvency rate is of 220%," recently stated Nicoleta RADU, CEO, PAID.

21.03.2019

Conclusions: TBILISI - the first Georgian International Insurance Conference

The first Georgian International Insurance Conference took place on 14 March 2019. The event put under scrutiny the current status and the future development perspectives of the local market, in an attempt of identifying the main growth opportunities. The forthcoming launch of the mandatory MTPL system was the most important topic on the agenda, as this new line of business has the potential to provide for a significant growth, but also to become a market disruptor.

14.03.2019

See all