The past week is set to result in another economic loss of over $1 billion, due to severe convective and thunderstorm weather in the U.S., where the resulting strong winds and hail, with insurance industry losses in the hundreds of millions, according to Aon.
The month of March saw over $2 billion of U.S. severe weather insurance industry losses, due to thunderstorms, tornadoes, hail and flooding and April has continued where that month left off.
Reinsurance broker Aon Benfield’s risk modelling and analytics unit Impact Forecasting estimates that the latest spring storms in the U.S. have caused another billion dollar plus economic loss, in just the last week, with the hardest hit areas being the Dallas-Fort Worth and San Antonio metro areas on the 11th and 12th April, where large, damaging hail and strong winds battered the region.
Impact Forecasting said that; “Given the tremendous damage footprint and volume of claims being filed across Texas, it will take several weeks for claims assessors to fully take stock of the recent property, automobile and commercial damage in both the Dallas-Fort Worth and San Antonio metro regions.”
Additional damages are expected from agricultural assets in the Texas region from the latest convective storm events.
Impact Forecasting estimates that total economic losses from the April 10-12 convective storms are likely to exceed $1 billion, with insurance (and perhaps reinsurance) industry losses “minimally in the hundreds of millions (USD).”
Since mid-March, Impact Forecasting says that public and private insurance entities in the state of Texas alone are likely to have incurred more than $2 billion in severe convective storm losses, potentially the costliest four-week stretch of severe convective storm related insured losses in Texas since a period between April 28 and May 5, 1995 (USD2.3 billion (2016 USD)).
After severe thunderstorms and resulting large hail storm events in the Dallas and Fort Worth regions of Texas on March 17th, and similar weather conditions in the Denton and Colin County areas on March 24th, this third major hail storm event has impacted further parts of the state. The Insurance Council reported $1.3 billion plus of insurance industry losses from the first two storms and the latest looks set to take that figure close to $2 billion, as Impact Forecasting explained.
Just this week we reported that one primary insurer, United, would be calling on its reinsurance coverage after losses suffered in Q1 2016 surpassed its retention on an aggregate reinsurance contract. With the losses continuing, due to this latest severe weather, it is almost certain that United will not be the only one.
And with some of these U.S. severe weather losses set to hit the reinsurance market it is almost certain that some ILS fund managers will be looking closely at the need to establish side-pockets, particularly for any aggregate multi-peril U.S. catastrophe covers they have invested in.
Additionally, these events could result in some minor losses to collateralised reinsurance sidecars, although at the level of losses seen currently any impact to ILS funds or sidecars will certainly only be attritional at this stage.
However the year is still relatively young and annual aggregate contracts have a long way to run, if they began on the 1st of January. So any attritional impact at this stage is likely to rise, once deductibles are eroded and the losses begin to spill into reinsurance or ILS markets.