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The Actuary The magazine of the Institute & Faculty of Actuaries

£9bn at risk

Natural catastrophes are by far the biggest risk in non-life property insurance. Based on its own risk assessment models, Swiss Re estimates, for example, that a major UK storm could lead to economic losses amounting to £12bn and insured damage of some £9bn. The consequences of a major flood event could be about half that size. Swiss Re emphasises how data quality and transparency are vital prerequisites for accurate catastrophe risk modelling.

Floods and their insurability are an increasing cause for concern for direct insurers, who have had to contend with new loss records on almost an annual basis. According to the Association of British Insurers, in 2000 the UK had its wettest autumn in more than 270 years. Record rainfall caused flooding in approximately 700 locations across England and Wales, damaging some 10,000 properties at a cost to insurers of over £1bn.

For the new publication Natural Catastrophes and Reinsurance, visit www.swissre.com.