Eurowind™ Model: Capturing Current and Future Risk
The Eurowind™ model provides a highly detailed risk model to help insurers understand the potential losses related to windstorms in Europe. This probabilistic model quantifies the risk from windstorms across 24 European countries and the North Europe Offshore region (Figure 1).
In a previous white paper (Winds of Change: Counterfactual Analyses of European Windstorm Risk) , we showed how the Eurowind™ Analytical Model - CoreLogic’s recommended view of risk - leads to an accurate depiction of European windstorm risk under current climate conditions and is fit-for-purpose in assessing windstorm risk over the next 10 years. The results presented in this white paper demonstrate how the Eurowind™ Analytical Model is also fit for purpose under conditions set by the possible pathways of future climate change up until at least 2050.
Figure 1: CoreLogic’s Eurowind™ model geographical coverage
Eurowind event set construction & Climate Change
Gust observations supplied by European meteorological agencies from over 4000 meteorological stations, spanning the period 1960 to 2022, are used to create the Eurowind historical storm footprint catalogue, from which the Eurowind stochastic event set is produced using CoreLogic’s proprietary physical perturbation scheme. The “gold-standard” accuracy of the wind observations is supplemented with robust climatological information from a 1,200-year Earth System Model (ESM) simulation and the European Centre for Medium-Range Weather Forecasts (EMCWF) around 1,800-year seasonal ensemble forecasting system (SEAS5) dataset.
The ESM components of the model were developed with support of the Meteorology Department of the Freie Universität Berlin (FUB) and the School of Geography, Earth and Environmental Sciences at the University of Birmingham. In addition to the ESM being used to create a stochastic set which reflects the current climate, CoreLogic and FUB thoroughly assessed the potential impact of Climate Change on European Windstorm risk, with the publication of a white paper Activity of Catastrophic Windstorm Events In Europe In The 21st Century in 2010.
Numerous scientific studies have been published over the subsequent years based on a large number of climate models (CMs), run by international teams. Model accuracy has increased over time owing largely to the increased CM spatial resolution and improved physical and dynamical parameterisation schemes. However, most studies, including those created using the very latest generation of CMs, agree in broad terms with the results of CoreLogic’s 2010 study.
Under scenarios of rising global temperature, changes are predicted in the frequency of storms, the location of storm tracks, and in the intensity and spatial extent of resulting winds. The first order impact on losses arises from changes in the positions of storm tracks. Whilst European Windstorm risk is likely to increase overall under climate change by the end of the century, the signal is dominated by uncertainty. On the timescales which particularly impact (re)insurance (including underwriting and regulatory capital stress-testing), i.e., in the short run and up to 2050, the potential impact on insured losses is less pronounced, with studies (Ranson et al. (2014) ) suggesting an increase in annualised loss in western Europe possibly reaching ~20% under a global surface temperature increase of about 2.4° with respect to the recent historical period. The uncertainty on this mid-century timescale, however, is still very high and effectively swamps the signal.
The uncertainty is primarily driven by the divergence between projections due to different climate models (i.e., multi-model uncertainty). Natural variability can be assessed, for example, by running ensemble simulations of a given CM where each ensemble member is initialised with different initial conditions. Studies suggest that natural variability plays a much smaller role than the uncertainty from diverging projections from multi-model contribution to future climate.
Given that the magnitude of the estimated impact of climate change on windstorm risk has not changed significantly since the CoreLogic study, the major advantage of subsequent studies is that they afford a much better grasp on estimating the uncertainty associated with the impact.
Whilst the uncertainty in the impact on wind hazard is so large, there is more certainty associated with projected climate change impact on the storm surge associated with European windstorms, as it is driven by sea-level rises. Hence, later in 2024, CoreLogic will release a fully updated Storm Surge component of Eurowind™ that includes a baseline stochastic set conditioned on the current climate, along with 4 additional sets based on future climate scenarios.
The remainder of this report is divided into three sections. In the next section, a brief introduction to climate modelling is presented. The last two sections present the impact of climate change scenarios on European windstorm risk, first in terms of the underlying hazard and then with respect to the resulting modelled loss.