October 10th, 2009

Impact and Implications of Swiss Hailstorms in July 2009: Link Index

Posted at 1:00 AM ET

Overview: Severe hailstorms caused widespread property, motor and crop damage in Switzerland on July, 23 2009. Although hail losses only make up an average of 9 percent of all claims in Switzerland every year, the peril has the potential to cause severe localised damage in the country. Hailstorms can trigger insurance claims totaling hundreds of millions of euros if they hit Swiss urban areas, and this scenario was realized on July 23 when hail measuring up to 50 mm in diameter badly battered central and northern cantons and caused the biggest Swiss hail loss in recent memory.

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Event Summary: Significant damage was reported across northern and central Switzerland following the hailstorms on July 23. Wind gusts of more than 100 kmph and heavy rainfall were mixed with hailstones the size of golf balls. Although reports said the storms only lasted for 30 minutes in some parts, they still caused extensive damage in six cantons (Aargau, Bern, Fribourg, Lucerne, St. Gallen and Vaud). Severe disruption to road and rail traffic was also reported and insurance officials said the hailstorms were the most costly to hit Switzerland in 50 years.

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Swiss Insurance Market: Insurance officials said the hailstorms on July 23 were the most severe and costly to hit Switzerland in 50 years. Despite typically being local events, these storms can cause severe damage to property, vehicles and crops as the July 23 hailstorms demonstrated.

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Insured Losses for July 2009 Hailstorms: For the purposes of this report, Guy Carpenter spoke to the Intercantonal Reinsurance Union (IRV), a body that represents all the cantonal insurers, and the ES-Pool, which represents 15 private insurers in Switzerland. The responses we received suggest cantonal and private insurers are likely to payout 150,000 claims totalling more than CHF733 million. Table 3 shows how the overall insured loss is split between cantonal and private insurers and line of business.

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Historical Hail Events: Severe hailstorms have become a regular occurrence during the summer months in Switzerland over the last few years, mostly in areas to the north of the Alps. Several other significant hail losses have been recorded in the country over the last ten years. According to Munich Re, a severe hailstorm in June 2002 badly hit the cantons of Aargau and Zurich. The cantons of Thurgau, St. Gallen and Lucerne were also affected and Munich Re said the hailstorms triggered economic losses of CHF335 million, of which CHF260 million were insured.

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Conclusion: Hailstorms in Switzerland pose a significant threat to property and the local population, despite the localized nature of the peril. Although hail events lack the widespread destruction of floods and windstorms, the risk is potentially costly, especially in densely developed urban areas.

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