PCS has designated 27 catastrophe events across the U.S. and Canada in the first half of 2016 alone. The designated events, including wildfires that swept Alberta, caused insured losses of $15 billion, according to an Artemis report.
PCS designates an event a catastrophe if it causes an industry loss of at least $25 million and impacts a substantial number of insurers and insureds, according to Artemis. Reinsurance activity remains on 11 of the 27 designated catastrophes so far this year – a fact which PCS said emphasized the need for preparedness.
“The nature of North American catastrophe losses this year speaks to the importance of preparedness and structural discipline,” said Tom Johansmeyer, PCS assistant vice president for strategy and development. “As to the former, we’re watching the largest Canadian catastrophe event in market history unfold – as well as the largest wildfire event in North America. It’s likely to shape discussions about Canadian risk and wildfire risk for years to come.”
The wildfires that raged earlier this year are set to be the most expensive single peril event in Canadian history, according to Artemis. While the final loss estimate hasn’t been announced, PCS Canada has said it expects the wildfires to cause an industry loss of $4.6 billion.
“While the fire represents roughly a third of the North American insured catastrophe loss total year-to-date and was the single largest event of the year, it was still smaller than the aggregate losses sustained in Texas,” said Ted Gregory, PCS director of operations.
Texas was racked by a series of hailstorms and related flooding in the first half of the year – with multiple events taking place days or weeks apart, according to Artemis. Gregory said that 60% of first-half U.S. losses – more than $60 billion – came from the Texas hailstorms.
The Texas weather losses highlight the importance of understanding the possible impacts of a series of adverse weather events, Artemis reported – particularly among insurance-linked securities players.
“When it comes to structural discipline, the activity in Texas could make the market see hail risk in a new way,” Johansmeyer said. “The aggregate loss is substantial, and the underlying events are large within the context of hail. This shows the importance of clear, independent catastrophe event definition in the ILS space.”
