As severe thunderstorm plays larger role in ILS, exposure growth & claim severity trends are key: PCS’ White

While the re/insurance market continues to soften and both aggregate and multi-peril structures return to many catastrophe bonds, Harry White of Property Claim Services (PCS), a unit of Verisk, notes that severe thunderstorm losses remain a critical factor.

With ILS deals taking on higher exposure to these storms, evaluating the shifting frequency and severity of industry losses from these events is key for those structuring and pricing this risk.

White, who serves as Head of Commercial Strategy at PCS, spoke to Artemis ahead of the launch of our Q2 2026 catastrophe bond and related insurance-linked securities (ILS) market report.

White revealed that Verisk loss data from 1998 to 2025 shows that average annual severe thunderstorm insured losses in the United States have increased from approximately $4 billion (1998-2005) to over $40 billion (2021-2025), a significant jump.

The executive also highlighted that the data points towards two key drivers: a national increase in insured exposure across severe thunderstorm-exposed states, and a sustained rise in the average cost of claims.

“Severe thunderstorm losses have grown across every major exposed state. Annual claims grew nationally from 1.3 million (1998–2005) to 3.5 million (2021–2025) as more storms meet the $25 million threshold for PCS catastrophe designation, with personal lines growing from 900,000 to 2.2 million per year and auto from 296,000 to 1.1 million. Missouri, Illinois, Colorado, and Minnesota each experienced more than $9 billion of cumulative loss over the same period, and Wisconsin, Arkansas, and Georgia have seen similar proportional growth, driven by residential and auto exposure expanding into previously undeveloped land,” White explains.

The executive noted that Texas stands as the most pronounced example of this national trend, as data from Verisk shows that the state accounted for 95% of all Q1 2025 CAT claims nationally, with events affecting the state rising from six per year (1998–2005) to 32 (2021–2025).

As well as this, Texas’ proportion of total insured losses from severe thunderstorm events grew from 13% to 23%, with five designated events each exceeding $1 billion in Texas in 2024 alone.

“Since 2000, Texas has added over 10 million residents, consistently growing at more than twice the national rate. That population growth has seen city footprints expand into previously undeveloped areas, with suburbs surrounding Dallas–Fort Worth and Houston now among the fastest-growing communities in the United States,” White added.

He continued: “In Texas specifically, personal lines claims grew from 101,000 to 519,000 per year and auto from 50,000 to 355,000, both mirroring state-level population and vehicle density growth. While increasing in absolute terms, commercial claims per event fell over the period, as much of the increased event frequency is registered in areas with high concentrations of residential exposures.”

However, as well as the increased exposure concentration, White observed that the average costs per claim also saw a significant increase too, with data from Verisk showing that residential reconstruction costs increased around 63.7% between 2014-2024, with the pace of increase doubling after 2019.

While the average cost per claim trend for personal lines increased in line with construction costs, White flagged that commercial lines saw an even sharper increase, with average commercial claim payments growing from $7,000 (1998-2005) to over $47,000 (2021-2025).

According to White, this spike was not only driven by increased reconstruction costs, but it was also fueled by a shift in the exposure profile for commercial risks with solar farms, data centres, and other complex risks becoming more prominent across severe thunderstorm-exposed states.

“The average cost per claim for auto has also risen steadily. The increased complexity of vehicles results in 28% of all vehicle repairs now requiring ADAS sensor calibration, while average total loss settlement values remain 34% above 2020 levels,” White added.

Concluding: “As ILS transactions see greater exposure to severe thunderstorm, understanding the changing profile of this peril is crucial for those structuring and pricing this risk.”

Read all of our interviews with ILS market and reinsurance sector professionals here.