A high-resolution compound vulnerability function for European winter storm losses

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Abstract
Economic losses from European winter storms impose a significant burden on society and are expected to increase due to exposure growth and climate change. Vulnerability functions play a key role in estimating such losses as they describe the relationship between a natural hazard’s intensity and damage to the exposed asset. This study fills an important gap in the literature by providing a vulnerability function for residential buildings which, for the first time, is able to account for damage from both the wind and the precipitation that winter storms produce. This compound vulnerability function is estimated using truncated beta regressions, and based on a large number of object-level insurance claims from The Netherlands and ultra-high resolution meteorological observations. Comparing our vulnerability function to the conventional specification, which only considers damage from wind, shows that the latter underestimates the damage by 5% [21%] {57%} for winter storms with 24-hour cumulative precipitation levels of 50 mm [75 mm] {100 mm}. Given that climate change is projected to further increase the frequency and intensity of such precipitation extremes in Europe, our study provides evidence in favor of using compound vulnerability functions to estimate future winter storm losses more accurately. Our vulnerability function can be used in natural catastrophe models to accurately estimate damage to residential buildings from European winter storms.

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