Insurance industry losses continue to rise due to U.S. severe thunderstorms and convective weather, with the last week another that will result in minimally hundreds of millions being added to the insurance industry bill, according to Impact Forecasting, the risk analytics and modelling arm of reinsurance broker Aon Benfield.
Losses from severe weather events in the United States have become the largest driver of industry loss for insurance and reinsurance interests so far in 2017, with the impacts of severe convective storms, tornadoes, large hail, damaging wind, rainfall and flooding all ramping up losses for the sector.
The last week saw further extensive damage across the central United States, causing the deaths of at least three people and injuring dozens. The Rockies, Plains, Midwest and Northeast all experienced the worst of it, with consecutive days of severe thunderstorm outbreaks leaving homes, businesses and vehicles damaged, according to Impact Forecasting.
High levels of rainfall from the clusters of severe storms also resulted in isolated flash flooding in some of the affected areas.
The most prolific day of the last week’s outbreaks was May 18th, when a rare High Risk warning was declared in Oklahoma and Kansas and numerous tornadoes and severe storm reports were logged.
Local storm reports, of tornadoes, hail and wind, are one way of looking at convective storm frequency and activity levels and Impact Forecasting provides a comparison in its latest weekly update that shows that there have been 9,023 reports so far in 2017, the highest number since 2012.
In fact, over the last ten years only 2011 saw more tornado reports by this time of the year and only 2008, 2011, and 2012 saw more local storm reports.
Over the last week there were over 1,000 local storm reports of tornadoes, hail and strong winds across the U.S., with 65 reported tornadoes. 4 Enhanced FuJita scale EF0 tornadoes were confirmed, 9 at EF1 strength, 4 at EF2 and 1 at EF3, during the week. These figures are expected to rise as more tornadoes are confirmed.
The reinsurance broker said that the wide area affected by severe convective storms across central and eastern sections of the United States this week means that the financial cost to both governments and insurers is expected to “minimally run into the hundreds of millions (USD).”
Impact Forecasting notes that today, May 19th, is also expected to see another day of powerful thunderstorms and this is expected to increase the losses that insurance and reinsurance interests will face from storms this week.
A number of insurers have reported rising aggregate losses so far this year, with some already calling on reinsurance support to pay losses. Additionally, a number of ILS funds and collateralized reinsurance vehicles have reported attritional rates of loss due to the severe storm activity across the U.S. in 2017.
With losses from severe weather in the U.S. running at record levels through Q1, both April’s losses and now May add to this and the risk to ILS structures, sidecars and certain cat bonds will continue to increase as the year progresses.
With the peak of the convective storm season upon us but tornadoes and hail possible through much of the year, it would not be surprising to see thunderstorm risks continuing to lead industry losses for insurers and reinsurers, barring any major events such as U.S. landfalling hurricanes or any earthquakes in a densely populated area occurring.
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