The historic 1987 Great Windstorm that hit areas of France and Britain would be more than 2.5 times as costly if it occurred today with possible insured loss exceeding $14.3 billion, a modeling firm estimates.
Risk Management Solutions (RMS) said its analysis reveals that a windstorm of similar magnitude striking the region this year would result in insured losses ranging between ?4 billion ($8.2 billion) and ?7 billion ($14.3 billion) across Europe.
Of this, some 70 percent would be generated in the U.K–over 2.5 times the ?1.4 billion ($2.8 billion) cost incurred in 1987, RMS said.
The windstorm that RMS researched struck southern England and northern France on Oct.15-16 1987 with unexpected ferocity.
Since then, "not only has inflation pushed up property prices since 1987, but there has been around a 20 percent increase in the number of households in the areas of Britain affected by the storm," said Barbara Page, senior model manager for RMS European windstorm modeling.
She noted that in 1987, approximately 7.5 million households were located in the storm's destructive path across London, the southeast and east of England, and "now this would be over 9 million."
Ms. Page added, "Commercial property and infrastructure investment in the region has also rocketed, and the cost of construction has more than doubled, so there would be a dramatic hike in rebuilding costs from twenty years ago."
RMS said the 1987 storm had been poorly forecast, partly because of the dearth of observations offshore where the storm developed, and partly due to the nature of the storm itself.
"While contemporary forecasting models are becoming increasingly sophisticated, events like the October 1987 windstorm, which was an extra-tropical cyclone with hurricane force winds, remain very difficult to predict," said Ms. Page.
RMS said that the Great Windstorm of 1987 was widely acknowledged as Britain's most severe since 1703, but losses would have been far higher if it had struck just tens of kilometers to the northwest of its actual path, taking a direct hit on London and the densely populated M4 corridor to the west. In the worst case analysis, losses could reach as much as ?9 billion ($18.4 billion) in the U.K. alone.
Although the worst affected areas of the October 1987 Windstorm are only likely to experience such high winds once every 200 years, the probability of insurers incurring the same level of losses from a storm is once every 35 years, according to RMS.
The company said its analysis shows that less severe but more widespread storms, such as Windstorm Daria in January 1990, can actually cause greater insured damage than powerful but more concentrated events like the 1987 Windstorm.
Copies of the RMS special report The Great 1987 Windstorm: 20-Year Retrospective can be downloaded free of charge at www.rms.com
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