AIR survey reveals steady growth of expected average annual insured losses
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A new survey released by catastrophe modeling firm AIR Worldwide Corp. on Wednesday finds expected average annual insured losses increasing steadily.
AIR’s “2014 Global Exceedance Probability Curve” estimated the long-term average annual loss from natural catastrophes and terrorism at $72.6 billion, up from $67.4 billion in its 2013 survey and $59.3 billion in its 2012 survey.
According to AIR, the rise reflects both increases in the numbers and values of insured properties in areas of high hazard risk and the availability of new models for regions and perils previously not modeled.
Moreover, the survey found that the cost of high-loss years will continue to grow. The company now estimates the 100-year return period loss at $231.5 billion, and the 250-year return period loss at $292.5 billion.
“Companies operating on a world stage need to understand their risk across global exposures to ensure they have sufficient capital to survive years of very high loss,” Bill Churney, chief operating officer, AIR Worldwide said in a statement. “Understanding — owning — this risk requires knowing both the likelihood of high-loss years and the diversity of events that could produce such losses.”
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