The United States has suffered another week of severe weather which looks set to result in another billion dollar plus toll for the economy and hundreds of millions of dollars of losses for insurance and reinsurance firms, according to Aon Benfield’s Impact Forecasting unit.
In its latest weekly update Impact Forecasting explained that a system of severe convective storms that struck central and eastern areas of the U.S. brought tornadoes, large hail, damaging straight-line winds, and heavy snow to portions of the Rockies, Plains, Midwest, and Southeast between the 22nd and 24th of March 2016.
98 reports of tornadoes (2), damaging winds (45) and large hail (51) caused widespread property damage and travel delays, while heavy snowfall also impacted some parts, all resulting in the expectation of another $1 billion or greater economic toll for the regions affected.
Impact Forecasting explained; “Given the ongoing nature of the event, it remains too preliminary to offer a specific economic or insured loss projection. The large footprint of the storm system – notably highlighted by the hail and wind damage across the Plains, Midwest and Southeast – is likely to initiate damage totals in the hundreds of millions (USD) on an overall economic basis and for public and private insurers.”
In total Impact Forecasting estimates economic losses of $1 billion or greater for this and other U.S. severe thunderstorm and weather outbreaks in the last week.
El Nino continues to be blamed for creating the atmospheric conditions responsible for the recent spate of severe thunderstorm and precipitation events, and this adds to the series of attritional weather related losses that the insurance and reinsurance industry has suffered since the start of the year.
It’s nothing that unusual, in terms of weather events, but should it continue the aggregation could become more meaningful for reinsurance and potentially some ILS players. It’s also worth remembering that catastrophe bonds have exposure to severe thunderstorm risks, with some on an aggregating basis.
Whether there will be reinsurance claims, or any impact on ILS funds collateralised reinsurance positions, is uncertain and impossible to confirm at this stage. But with ILS capital increasingly exposed to homeowner and commercial property risks at a lower level and aggregate covers with broadened terms used widely, the chances of ILS market exposure to events such as these continues to grow.
Also read other articles on U.S. severe weather losses from 2016 (most recent first):