Understanding the concepts behind European winter storm models
In an article for Zeitschrift für Versicherungswesen, Howden Re’s Mathias Raschke, Director, Nat Cat Modelling, Germany and Austria, and Verena Schärtl, Director, Head of Actuarial, Germany and Austria, explore how natural catastrophe (NatCat) models simulate and quantify the risks of European winter storms. As the 2025 winter storm season begins and reinsurance renewals approach, they offer timely insights into how models capture the physical and financial realities of this peril.
The article outlines the scientific and actuarial concepts that underpin NatCat modelling for extratropical cyclones, the storm systems responsible for much of Europe’s winter weather risk. It explains how the models estimate the probability and financial impact of storm-related losses by combining three components: hazard, exposure, and vulnerability.
Raschke and Schärtl compare several modelling approaches used by vendors and researchers, including:
- The Seed Approach, which generates stochastic storms by varying and modifying historical wind fields.
- The use of physical–numerical climate simulations, which can produce physically realistic but historically unobserved events.
- The Principal Component Analysis (PCA) method, which statistically decomposes historical wind fields into dominant spatial patterns and can be used to generate synthetic storms.
- The stochastic scaling approach, which applies multivariate extreme-value statistics to estimate joint return periods of storm-related loss drivers.
Each modelling approach has its own strengths and trade-offs. The authors emphasise the importance of accurately modelling spatial correlations in storm impacts and ensuring that exposure data align with the assumptions of the vulnerability module to produce reliable loss estimates.
Raschke and Schärtl conclude that NatCat modelling for European winter storms has advanced considerably, though all approaches remain subject to the limitations inherent in their approximations. Looking ahead, continued refinement of climate models, enhanced stochastic frameworks, and improved data harmonisation will be critical for capturing evolving risks, particularly as climate change and shifting exposures reshape Europe’s storm landscape. These findings complement ongoing research by Howden Re’s Atmospheric Perils Specialist, Robert Graham, focused on reconstructing historical records of windstorm activity in Europe and improving our understanding of meteorological drivers of multi-decadal variability in windstorm activity, and taken together help to reduce uncertainties in quantifying European windstorm risk. These efforts are actively supported by Howden Re through its ongoing collaboration with academia, model vendors, and market participants, and feed into Howden Re’s bespoke view of risk for windstorms in Europe.