Estimates for damage caused by the severe thunderstorms and tornadoes at the end of April have been rising in recent days. The highest insured loss estimate we had heard was the one from AIR Worldwide who put losses at up to $5.5 billion for weather conditions between the 22nd – 28th April. Now Risk Management Solutions have put in an estimate of $3.5 billion to $6 billion for weather events between the 25th – 28th April.
These figures represent insured losses from Alabama, Georgia, Tennessee and certain other states. Estimates include losses from personal, commercial, auto, and industrial lines of business, and represents structure, contents, and time element coverages as covered by the RMS® U.S. Severe Convective Storm Model.
“This tornado outbreak is set to become one of, if not the, costliest severe convective storm event in U.S. history,” said Matthew Nielsen, product manager at RMS. “A key contributor to the extent of damage was the exposure within the tornado touchdown area.”
RMS put a single tornado event in Tuscaloosa and Birmingham, Alabama as responsible for nearly 40% of that estimate (from$1.4 billion to $2.4 billion). According to this report insured losses in Alabama alone could be between $2.45 billion and $4.2 billion.
So, with RMS’ estimate covering a shorter period of time it seems likely that overall insured losses from the storms in April will be at the top end of estimates.
As far as the exposed catastrophe bonds are concerned, we’re still no clearer as to the final impact. PCS catastrophe serial loss estimates are still to be issued on a number of events in the final days of the spell of tornadic weather and it now seems likely that those loss estimates will determine whether there is any impact on Mariah Re or the Residential Reinsurance deals. Losses from the tornadoes on the 27th of April were extremely high in Alabama and we’re waiting to hear loss estimates for events in Georgia on that date as they could qualify as losses for Mariah Re.