Hail storms caused by severe thunderstorms in the Dallas and Fort Worth area of Texas on Thursday 17th March 2016 are now expected to result in over $600 million of insurance claims, according to the states Insurance Council.
The event was mentioned in Aon Benfield’s Impact Forecasting report, which we covered here on Friday when the broker said it expected over $1 billion of economic losses across the U.S. from last week’s severe storms, hail and tornadoes.
But the magnitude of the damage from Thursday’s hailstorm event in Texas is just becoming clear, thanks to an update from the Insurance Council of Texas, which shows that this single hail storm is set to become at least the 12th biggest insured storm loss on record for the state.
Texas often suffers severe impacts from large hail and severe thunderstorms and with these perils covered widely in the ILS market, through severe thunderstorm catastrophe bonds and more frequently through collateralised reinsurance covers, losses of this magnitude are meaningful enough to result in some analysis being required by ILS managers.
The Insurance Council estimates that auto and property insurance claims totals will reach and probably surpass $600 million from Thursday’s hail storm event, with at least $300 million from auto damage after an estimated 50,000 cars were damaged.
Mark Hanna, a spokesperson for the Insurance Council of Texas, told the Fort Worth Star-Telegram that he classed the event as a “catastrophe” for the state and its residents.
There is a distinct possibility that the final insurance and reinsurance industry loss will be higher, with claims still being filed with homeowners and auto insurers in Texas. Whether it will hit any reinsurance layers immediately is impossible to say, but this is another event that will add to aggregate totals and could be attritional for the ILS fund market through potential exposure of collateralised reinsurance contracts.
Texas is on watch for more severe thunderstorms later today, Wednesday, with further outbreaks of hail, tornadoes and strong winds expected. The U.S. severe thunderstorm season and tornado outbreaks are currently running around average, which is ahead of the last few years at this stage.