Severe convective weather that struck North America in May 2018 with thunderstorms, tornadoes, large hail, flooding and strong winds is estimated to have caused somewhere around $2 billion, perhaps more, of insurance and reinsurance industry losses by Aon.
The toll will make May the most impactful month of severe weather so far this year across the United States and Canada, with more than $1.7 billion of the bill expected from the United States and at least another $325 million from one severe thunderstorm outbreak in Canada.
As we wrote yesterday, June has begun with a significant toll for insurance and reinsurance interests, as a single hail storm that hit the Dallas Fortworth area of Texas is expected to result in an industry loss of around $425 million.
But back to May, Aon’s Impact Forecasting catastrophe risk modelling team said that it recorded four separate severe weather outbreaks across the U.S. in May, which resulted in extensive hail and wind damage.
The majority of this struck the eastern two-thirds of the U.S. from the Rockies to the Mid-Atlantic, where baseball-sized hail was reported and straight-line winds gusted over 80 mph (130 kph). Thunderstorms also caused catastrophic flash flooding in Ellicott City, Maryland for the second time in less than two years.
Impact Forecasting believes the toll from this to be an economic losses of minimally $2.3 billion, with the insurance and reinsurance sector likely to take two-thirds of the bill.
One multi-day outbreak of severe convective weather from April 30th to May 3rd saw the most significant damage in Kansas, Nebraska, Oklahoma, Missouri, Iowa, Illinois, Wisconsin, and Texas, resulting in an insured loss of around $725 million.
Later in the month, clusters of severe thunderstorms from May 12th to 16th caused widespread damage from the Rockies to the Northeast, including individual clusters that affected areas around New York City, Washington DC and Baltimore, MD were thought to be a “derecho”. The result of these outbreaks is expected to be an insurance and reinsurance industry loss of at least $1 billion.
There were also outbreaks of thunderstorm weather in Florida during the week of May 13th due to tropical weather moving up through the state, and another outbreak in Texas, Oklahoma, and Missouri on May 19th and 20th is also expected to drive around $100 million of economic and insured losses.
Driving the North American thunderstorm insurance industry loss higher in May, damage reported in Canada’s Ontario and Quebec regions left an insurance industry bill of US $325 million, according to data from CatIQ.
So overall the month of May 2018 has driven at least $2 billion of losses to the insurance and reinsurance industry, a bill that some collateralized markets could end up seeing a portion of and that could erode some aggregate retention layers, we’d imagine.
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