Building a stochastic model of windstorm loss in North-West Europe

Insurers need to consider the probability of the correlation of high winds at multiple locations in the same storm event and the variations in vulnerability of large numbers of buildings. The severity-frequency relationship of loss to an insurer’s portfolio is not the same as the windspeed return period relationship for individual sites within the area covered by the portfolio. To look at the correlation of winter storm hazard at multiple locations in Europe it is necessary to model storms across the entire region. This approach to the problem results in a hazard model which ignores geo-political boundaries, outputs windspeeds over the sea and can be used in a wide variety of risk analysis applications, including insurance. This paper outlines the development of the RMS European windstorm model to quantify the insurance risk from extra-tropical cyclones in north-west Europe.