Windstorm Kyrill is a reminder that windstorm is a real threat to insurers and reinsurers in Europe. By Julian Alovisi, Claire Souch and Jane Toothill

Driven by an exceptionally strong jet stream, Kyrill hit Europe on 18 and 19 January. It caused considerable damage in the United Kingdom, Germany and the Netherlands and, unusually for a European storm, extended its impact as far east as the Czech Republic and Poland. At least 47 people died. Kyrill was the worst windstorm to hit the continent since Lothar and Martin in 1999.

In fact, Kyrill was not an abnormally powerful storm. Although sustained wind speeds reached around 130kph (80mph), they did not match the levels of Lothar in 1999, when wind speeds of around 195kph were recorded. The key factor behind Kyrill's sizeable insured and economic loss was its large damage footprint in the United Kingdom and mainland Europe. Also, it was a relatively long event and gale force winds battered some areas for more than 24 hours.

Series of events

Kyrill took just two days to travel from Canada to the coast of the United Kingdom, a factor attributed to the remarkable speed of the jet stream. The UK Met Office said the wind speeds were the highest to hit the country since January1990. The strongest were recorded in northern England. Over half a million homes and businesses were left without electricity at the height of the storm, and 14 people were killed. The powerful winds ripped roofs off buildings, downed trees and caused severe disruption to transport. The Association of British Insurers (ABI) said the storm could cost insurance companies around £350 million (520 million euros).

Kyrill tracked east after moving across the United Kingdom, battering Germany, the Netherlands, the Czech Republic and Poland. Germany suffered the largest percentage of insured losses from Kyrill after the storm intensified and produced wind gusts of up to 195kph. The powerful winds felled trees, and property damage was reported across the whole of Germany. Thirteen people were killed and over a million households were without power. Heavy rain accompanied the storm, triggering flooding in coastal and low lying areas. All forms of transport were badly disrupted and Berlin's new train station, the biggest in Europe, was evacuated and closed for 14 hours after a two tonne girder fell.

In the Netherlands, powerful winds and heavy rain also caused damage and forced flight cancellations. The Dutch meteorological bureau KNMI said the country had not experienced such a powerful storm since Jeanette in 2002. The west coast of the Netherlands was badly hit and seven people were killed.

Kyrill's impact was also felt further east. Two factors can explain this unusual eastern penetration of the storm. First, the location of high pressure to the north of Europe and a broad area of high pressure to the south induced a strong flow pattern from west to east well into Europe, steering all low pressure systems east between the two areas of high pressure. Second, the presence of a strong jet stream also directed Kyrill on a fast moving and far reaching easterly path.

Winds of up to 120kph hit the Czech Republic and Poland, uprooting trees and tearing down power lines. More than 1 million Czech customers lost power, and air travel was disrupted. Three people died in the Czech Republic, and the government declared a state of emergency in four regions. In Poland, the strong winds downed power lines and thousands of trees. Nearly 800,000 homes lost electricity at the height of the storm and around 500 homes were damaged. Austria, Belgium, Denmark, France, Hungary, Luxembourg, Switzerland and the Baltic countries also suffered damage and disruption.

Insured losses

The severe and widespread damage triggered significant insurance claims across Europe, and RMS has estimated a total market property loss of 3 billion euros in all affected countries other than the Czech Republic and Poland. Up to 65% of this loss could come from Germany. This estimate is based on the RMS industry exposure database (IED) of residential, commercial, industrial and agricultural property, but unmodelled losses could push this figure up towards 4 billion euros.

These unmodelled losses come from several sources. In terms of property exposure, the RMS model does not currently cover the Czech Republic or Poland. Although insurance take-up rates are high in both countries, recent major catastrophe losses have generally come from flood, and the perception has been that wind is less of a concern. Although losses in these countries were smaller than further west, the occurrence of an event capable of affecting all these areas has come as a surprise to many multinational insurance companies. As a result, RMS is considering extending its model to territories in eastern Europe.

Other property losses not covered by the model include rain related costs and additional property lines of business. Insurers can model these risks using their own exposure information, they but are not represented in the model database.

Apart from property exposure, there are several other components of loss that are not considered by even the most up to date models. These typically include losses to shipping, forestry, transport and communication - all of which can significantly exacerbate losses in large European windstorms like Kyrill.

For example, during Kyrill, a British container ship, the Napoli, was badly damaged in the English Channel. The 62,000-tonne vessel, carrying 2,200 containers, was deliberately grounded on the English coast to stop it breaking up in deep water following a serious structural failure. However, around 100 containers broke free from the deck, and the Napoli also leaked up to 200 tonnes of oil. Hull and cargo losses are estimated at over $100 million. The severe weather also disrupted shipping at Rotterdam's port when a drifting container ship hit an oil jetty, leaking around 300 tonnes of oil.

Kyrill also caused significant forestry losses, downing an estimated 62 million trees across Europe. Forests in Germany and the Czech Republic suffered the bulk of the damage. According to the German Forestry Council, more than 40 million trees were downed in Germany. The forestry council estimates this amounted to 20 million cubic metres of destroyed timber, at a cost of around 1 billion euros in damages and lost revenue. However, as Kyrill's path fortunately tracked to the south of Scandinavia, forestry losses across Europe were not on the same scale as those incurred by Windstorm Erwin in 2006.

Transport across Europe was badly affected, with hundreds of flights cancelled at several airports and widespread rail cancellations. Flights at all the major airports in the United Kingdom and Germany were disrupted, while rail networks were forced to suspend services. In London, most underground lines were disrupted and London Bridge railway station closed after part of its roof collapsed. Severe disruption was also reported on the German rail network as the Deutsche Bahn national railway company suspended all services for the first time in its history. In Holland, meanwhile, all rail services were cancelled for the first time in around 17 years, and strong winds damaged the arched roof of Amsterdam's Central Station, prompting the authorities to shut the station.

The transport chaos, coupled with a loss of electricity to well over 3 million homes and business at the height of the storm, triggered business interruption claims. However, power was quickly restored and, although business interruption claims will contribute to the losses, the majority will relate to residential property, commercial property and vehicles.

Historical comparison

Kyrill was a significant event for the insurance industry, but large windstorm losses in Europe are not unprecedented. In 1999, windstorm Lothar battered France, Germany and Switzerland with destructive winds, causing an insured loss of 7.2 billion euros in today's money, according to Munich Re. Lothar was a very powerful storm and packed winds of up to 200kph. However, it was a far smaller storm than Kyrill and its impact was mainly confined to the three countries. While Kyrill lacked Lothar's punch, it affected a far wider area. The 1987 storm known simply as 87J was intense, but took a markedly different, northward track and serious damage was confined to southeast England and northern France.

So what would happen if Europe were to be hit by a storm as large as Kyrill and as intense as Lothar? RMS has identified several tracks from within its stochastic event database that combine the two storms' characteristics. RMS estimates losses from such an event could range from 10-15 billion euros for modelled countries. One such track is shown in Figure 3, and has an associated loss of 14 billion euros based on the RMS 2006 exposure database. Windstorm Daria in 1990 is the closest historical analogue and on a contemporary basis, losses would be around 10 billion euros.

A recurring trend?

Windstorms pose the greatest risk to insured exposure in northwest Europe, and it is only a matter of time before a storm with a combination of Lothar's and Kyrill's characteristics develops and goes through a densely populated area of continental Europe.

There is historical evidence for such events - for example, the 1703 storm, described by the writer Daniel Defoe, hit London directly and is thought to have affected a very large area in northern Europe, thrashing the Netherlands, Belgium, Germany and Denmark.

The damage Kyrill inflicted across Europe has driven debate about the probability of another storm of this kind recurring and whether we can expect to see a trend of windstorms moving through northern Europe and into central and eastern regions.

Munich Re warns that the probability of severe windstorm in Europe is increasing, stating that the recurrence interval between severe windstorm loss events has decreased to less than ten years. However, RMS researchers argue that there is currently no significant visible trend to suggest an increase in either the activity or severity of European windstorms, but we continue to research potential future changes.

A strongly positive North Atlantic Oscillation (NAO) index may help to explain the relatively active 2006/2007 windstorm season, and a correlation between a positive NAO index and the occurrence of significant windstorms has a historical precedent in 1990 (Daria and others), 1999 (Lothar, Martin and Anatol) and 2002 (Jeanette).

Claire Souch is director, international model management, RMS, and Julian Alovisi and Jane Toothill are members of Guy Carpenter's European Model Development Team. and