Storms frequent even in Nordic countries causing extensive damage

Insurers looking at higher premiums for property insurance in previously "safe" location

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While Category 4 hurricanes like Katrina are extremely unlikely to occur in the Nordic countries, several severe storms and mini-tornados causing extensive damage have swept across this quiet corner of the world in the course of the past few years.
      Last January, a powerful storm named "Gudrun" cut off electricity supplies to 400,000 households in Denmark and Sweden. On Denmark's western coast, flooding hit the streets of small towns just like in the beachfront areas of the Gulf of Mexico. In Sweden, the tempest tore through timber stands: as much wood was felled in a single night as would normally be harvested in an entire year.
      Even normally tranquil Helsinki got a reminder of capricious winds last Sunday, when a mini-tornado swept across theTali golf course and blew away a hospitality tent that was packed with people.
      In Finland, autumn storms have brought down trees, and homes have been left without electricity for long periods, as overstretched utilities crews carry out clear-up work.
     
Many believe that such freaks of nature are currently occurring more often than previously. However, no solid statistics exist to prove this.
      "We do not expect these kinds of storms to occur in the Nordic countries every couple of years", said David N. Bresch, at a seminar held by one of the World's leading reinsurers, Swiss Re, in Copenhagen on Tuesday.
      The insurance company will change its premium setting only after there is a scientific unanimity about the changes in the climate. Nevertheless, Bresch's comments can imply that currently insurance premiums in the Nordic countries are priced too low, and that it should cost more to protect oneself against natural catastrophes.
      The Chairman of the Board of Swiss Re Germany, Ludger Arnoldussen, added that "risks have not been properly estimated when setting the premiums of insurance policies". Swiss Re Germany is in charge of the corporate's Nordic operations.
      Bresch estimated that last winter's Gudrun storm caused EUR 900 million in insured damage. According to Swiss Re's storm model construction, such a large storm would not be statistically likely to occur again within 20 years.
      The 1999 Anatol storm in Denmark caused EUR 1.9 billion in insurance claims, according to Bresch. The frequency of a storm like Anatol in the Nordic countries is once in 70 years.
     
Insurance premiums will increase at the latest when the scientific cooperation between insurance companies and universities can demonstrate that natural catastrophes will become more common in the Nordic countries.
      For example in Southern Germany, people living along the rivers should pay extremely high premiums if they wish to insure their homes against floods, because these rivers flood regularly.
      In August of this year only, the floods in Germany, Austria, and Switzerland cost Swiss Re about EUR 67 million in insured damages.
     
Another reason for the growth of storm damages is the fact that the more prosperous the areas are that are hit by disasters, the larger the damage claims are, and the more often the victims of a storm have taken out insurance.
      On the other hand, it is not known for sure yet, whether or not storms and floods are a result of climate warming.
     
Ulrich Ebel, a forest expert of Swiss Re, notes that the current methods of forestry had a large impact on last winter's forest damage. For example in Southern Sweden the forest acreage has grown significantly in the course of the last 50 to 70 years. A large part of the new forests are fir stands that are easily blown over by a storm.
      Swiss Re is the world's second largest reinsurer - after the German Munich Re - as well as a financial services group. The task of Swiss Re is to decentralise the risks of ordinary insurers.


Previously in HS International Edition:
  Record-breaking year for mini-tornados in Finland (30.8.2005)
  Storms become integral part of insurance business (23.8.2005)
  BACKGROUND: Part of wood left to rot in forests (22.3.2005)
  Finns helping to clear storm damage in Sweden (22.3.2005)
  Storm kills at least 14 and causes damage throughout Northern Europe (10.1.2005)

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