U.S. storm losses $2bn+, global events cost economy $5bn+ in June: Aon

by Artemis on July 10, 2017

The month of June 2017 has resulted in another $2 billion of insurance and reinsurance losses due to severe weather, convective storms and flooding in the United States, while globally convective weather and flooding have caused over $5 billion of economic losses, according to Aon.

Supercell and tornado severe convective weatherReinsurance broker Aon Benfield’s catastrophe risk modelling and analytics unit Impact Forecasting said that severe weather outbreaks in the U.S. once again drove the majority of June’s losses.

Severe convective storms caused outbreaks of large hail, numerous tornado touchdowns, straight-line winds and isolated flash flooding which all added up to an economic loss expected to exceed $3.0 billion.

Of the economic toll, Impact Forecasting expects that public and private insurance entities will suffer at least $2 billion of losses, raising the half-year insurance and reinsurance industry loss from severe weather in the U.S. to over the $14 billion mark we reported on recently.

An outbreak of severe weather on June 11th was the most impactful from a financial perspective, Impact Forecasting said, striking parts of the Upper Midwest with series of powerful and fast-moving thunderstorms, leaving a trail of damage in the states of Minnesota, Wisconsin and Michigan.

The Minneapolis-Saint Paul metropolitan region was one of the hardest hit, where substantial wind and hail damage hit homes, businesses, and vehicles. Insurance payouts from this single event are anticipated to approach $1 billion; while the economic impact is seen around the $1.4 billion mark.

Adam Podlaha, Global Head of Impact Forecasting, commented on June’s weather; “Costly impacts resulting from severe convective storms were not solely confined to the United States in the month of June. Parts of Europe – notably Germany – incurred a significant cost resulting from large hail as the industry continues to get a better handle on using catastrophe models to further understand impacts from the peril. Lightning was also the primary cause of several major wildfires in South Africa; expected to result in one of the costliest payouts for a natural disaster in the local industry’s history.”

Major flooding in southern China during June damaged more than 130,000 homes and China’s official Ministry of Civil Affairs (MCA) put aggregated economic losses at more than $2.4 billion, which makes the event the costliest individual global natural catastrophe in June. Insured losses here are expected to be much lower, once again highlighting the underinsurance problem in China.

Other global natural catastrophe and severe weather losses in June include:

  • Thunderstorm activity in Europe peaked on June 22, when a particularly violent outbreak caused significant losses to German insurers, estimated at EUR400 million (USD455 million).
  • Torrential monsoonal rainfall caused devastating floods and landslides in Bangladesh and neighboring northeast India, causing at least 169 fatalities.
  • Other flood-related events in Asia (including China, Taiwan, Indonesia, Bangladesh, and India) resulted in a combined death toll of at least 312 people.
  • Additional significant floods occurred in Central America, Chile and Western Africa.
  • Strong thunderstorms affected Western Cape in South Africa, where the region was previously suffering from severe drought. However, the greatest damage cost occurred after lightning strikes prompted several catastrophic fires. Published reports indicated that the local insurance industry could face payouts approaching ZAR4.0 billion (USD305 million); one of the costliest events in the region’s history.
  • The combination of extreme heat and dry thunderstorms led to one of the deadliest wildfires in Portuguese history, killing 64 people and destroying hundreds of homes and businesses. Local government indicated that economic losses may reach EUR497 million (USD565 million).
  • Two tropical storms made separate landfalls in North America: Beatriz in Mexican state of Oaxaca and Cindy in the US Southeast. Damage costs from each event were largely negligible.
  • An offshore magnitude-6.3 earthquake damaged more than 1,100 homes on the Greek island of Lesbos.

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