Are you still surprised by heavy hail, severe drought, windstorms, frost and other weather phenomena that cause a lot of damage even out of their usual seasons? We can expect their frequency and intensity to increase further in the future. So how can we protect ourselves and ensure our safety? The first step is to take preventive action, but it is probably also inevitable to consider adapting agricultural production to the climate, experts agreed at today's event held at the Triglav Lab digital centre.
Guests at today’s event entitled “Ready for the (un)predictable: Weather extremes” and other experts presented data on natural loss events and shared their views on how to cope with them. According to the statistics, some extreme weather events are almost expected. Why is this the case?
Branko Gregorčič, a meteorologist at the Slovenian Environment Agency, presented some climatological facts: the atmosphere over Slovenia is warming by about 0.4 degrees Celsius every 10 years. Summers in Slovenia are becoming hotter, sunnier and drier. What are the expected consequences? “At higher temperatures, the air can take in more water vapour (in its gaseous aggregate state). When the vapour condenses into water droplets, the latent heat of condensation is released, which is actually the energy source for weather processes, especially convective ones. We can therefore expect to see a further increase in the frequency and intensity of torrential downpours and other heavy storm-related phenomena, such as hail, lightning strikes and gusts of gale-force winds. Meanwhile less precipitation in the summer months, coupled with a greater frequency of heatwaves, leads to more frequent droughts and thus an increased risk of wildfires,” Gregorčič warned.
Weather extremes also increase the number of claims
“The frequency and intensity of inclement weather or loss events (minor or major) also result in a higher number of claims,” explains Uroš Metličar, Director of Property Claims at Zavarovalnica Triglav. The insurance company’s calculations, which compared the probability of hailstorms in Slovenia from 2009 to 2022, show that the probability of hailstorms in 2009 was significantly lower than in the recent period. Considering the statistics of events identified as mass loss events, Zavarovalnica Triglav has seen an upward trend in the number of hailstorm claims since 2014. In property insurance, hail damages more vehicles than buildings, but the total amount of claims paid out is higher for buildings than for vehicles. According to Metličar, the volatility from one year to another is very high and there is no clear upward or downward trend in the volume of claims arising from floods and windstorms, which mostly affect buildings.
Agriculture is the most vulnerable
“Climate change is increasing both the frequency and the intensity of damage to agriculture, as agricultural crops are the first and most exposed to adverse weather events,” explains Aleš Zupan, Director of the Agricultural Insurance Department at Zavarovalnica Triglav. The period of hailstorms is getting longer, lasting from early April to late October, while the trend of damage is even more worrying in the case of spring frosts and droughts. This year, the fruit-growing sector has experienced its fifth spring frost in the last eight years. The drought damage that hit the crop-growing and livestock-farming sectors the hardest last year was comparable to the two worst droughts in the last 30 years, in 2003 and 2013, Zupan said.
Danilo Steyer, who has worked in viticulture for 30 years, backed up the experts’ statements with his own experience. “Being a viticulturist, a winemaker, is a way of life, a kind of mission. Our workshop is under the open sky, so to speak, so it is very vulnerable. The quality and quantity of the harvest depend on knowledge, experience, techniques and weather conditions,” he said. Steyer explained that 30 years ago, the grape harvest in the Štajerska region began in early October, but now it is a good month earlier. Until 2016, when a spring frost destroyed their entire crop, he says that the only thing wine-growers feared was hail: “Climate change is so profound that vineyards are at risk of damage all year round. On our farm, we therefore cannot imagine operating without prevention and insurance.”
As the first step to manage the risks in agricultural production, Zavarovalnica Triglav advises preventive protection (anti-hail protection nets, overhead sprinkler systems, irrigation, production in glass and plastic greenhouses, etc.). As the next step, and when preventive protection is not possible, it recommends appropriate insurance. The insurance company also sees the need to adapt agricultural production to climate change as inevitable, particularly in terms of implementing a strategy to adapt agricultural production to certain risks such as spring frost and drought.
Record-breaking extreme weather in Europe last year
According to the Milliman consulting firm, Europe was hit by record-breaking extreme weather last year, which required European (re)insurers to pay out above-average claims. The costliest was the drought, the worst in 500 years, which caused €19 billion in insured losses in the agriculture and energy sectors.
The volume and impact of mass loss events resulting from extreme weather conditions (mostly floods, windstorms, hail and frost) on the Triglav Group’s operating result fluctuates from year to year. Over the last decade (2013–2022), the highest total estimated values of mass loss events were in 2014, 2017, 2020 and 2022. Last year was the third year with the highest number of such claims over the period, while the average annual estimated value of mass natural loss events claims for the Triglav Group was almost EUR 23 million.
The insurance company is aware, of course, that claims, including mass claims, are a normal part of its business, and that what happens depends on the size of its insurance portfolio or the number of clients with such insurance. In this context, it has effective reinsurance protection in place on an annual basis, which allows for the stability and security of the company’s business.