A complex weather system that saw several central U.S. states hit by flooding, rainfall and blizzards between April 28th and May 1st, 2017 is expected to result in insured losses in the hundreds of millions of dollars, at least, according to Aon Benfield’s Impact Forecasting unit.
The U.S. has experienced widespread flooding and severe convective thunderstorm weather throughout the opening months of 2017, and the latest event saw numerous U.S. states fall victim to the impacts of extreme adverse weather. This has driven an increased level of losses or attrition for insurance, reinsurance and ILS fund interests.
Substantial flooding was witnessed in the Mississippi River following excessive rainfall for consecutive days in parts of the Plains, Midwest and Mississippi Valley, while both flash floods and riverine flooding occurred in Missouri, Oklahoma, Illinois, and Arkansas.
Wind and major tornado damage was recorded in multiple U.S. states during the period, with two strong tornadoes hitting Van Zandt County, Texas within just a couple of hours of each other, says Aon’s recently published catastrophe recap.
Furthermore, the convective weather event also resulted in heavy snow and blizzard conditions that were cited from the Rockies into the Plains and Upper Midwest, says Aon. Because of the event, which is expected to drive further economic and insured losses in the U.S., states of emergency were declared in Missouri, Arkansas, Oklahoma, and Mississippi.
Aon reported in March that severe convective weather conditions in the U.S. between March 13th and March 17th is expected to result in an economic loss of more than $1 billion, which, combined with other events in the month resulted in U.S. severe weather losses of beyond $2 billion in March alone.
In the U.S. alone, severe thunderstorms and convective weather are expected to have caused and insured loss of $5.7 billion in the first-quarter of 2017, a record cost for the peril during Q1 and, the latest April event is expected to increase the U.S. insured loss estimate for this peril as the market moves further into 2017.
“Given the significant multi-peril footprint across more than one dozen states, it remains far too early to provide an exact economic or insured loss estimate at this time,” says Aon.
“With several rivers and streams additionally forecast to crest in the coming days, it will take weeks until the full scope of the event is realized. At a minimum, the total economic and insured loss impact is expected to reach into the hundreds of millions (USD),” continues the brokerage.
It remains unclear if any of the most recent losses will result in reinsurance sector claims or any impact to insurance-linked securities (ILS) funds collateralised reinsurance business. But the fact that ILS capital is continuing to find more direct access to risk and is increasingly tied to aggregate covers, the greater chance there is for the ILS market to be exposed to these types of events.