AIR Worldwide releases 2014 Global Exceedance Probability Curve Report
Source: Asia Insurance Review | Feb 2015
AIR Worldwide released its “2014 Global Exceedance Probability (EP) Curve” report, detailing key loss metrics (such as average annual loss and select return period losses) from AIR’s global industry EP curve for AIR modelled regions and perils.
Based on the report, AIR estimates that the 1% exceedance probability loss (or the 100-year return period loss) is approximately US$231.5 billion and the long-term average annual loss from natural catastrophes and terrorism is $72.6 billion.
The 2014 report bases its global loss metrics on perils and regions currently modelled by AIR, including most new models and updates released during 2014, as well as updated industry exposure databases as of the end of 2013.
Illustrating the annual variability of losses, insured losses from global natural and man-made catastrophes in 2014 were approximately $34 billion according to Swiss Re, which is about half the average of $64 billion over the last 10 years. Losses in 2013 were also well below the long-term average; in contrast, losses in 2011 exceeded $110 billion (the second highest on record, after 2005).
The report also presents two global insured loss scenarios around the 1% aggregate EP (the 100-year return period) to illustrate the wide variety of perils and regions that can combine to produces losses at a given EP level.