Insurance and reinsurance industry losses from the severe convective weather and tornado outbreak in the U.S. southeast over the last few days are expected to reach well into the hundreds of millions of dollars, possibly higher, according to Impact Forecasting.
Already an estimate from the Mississippi insurance commissioner suggests that insurance losses in the Hattiesburg region of the state are likely to exceed $200 million. Reports suggest a 15km track of damage from this estimated EF3 tornado event.
But the severe weather was also widespread across populated areas of Georgia and northern Florida as well, and media reports suggest that we could have seen the first billion dollar U.S. weather loss of 2017.
The multi-day severe convective weather outbreak struck across southeastern states including Georgia, Mississippi, Alabama, Louisiana, and Florida, with at least 18 deaths reported and over 150 people injured.
Impact Forecasting, the risk and weather modelling division of reinsurance broker Aon Benfield, explained that a “complex atmospheric set-up of meteorological ingredients” that resulted in a weather set-up conducive for “significant long-track tornadoes, very large hail and damaging straight-line winds.”
The NOAA’s Storm Prediction Center (SPC) has released figures suggesting a preliminary number of 344 reports of severe weather, with 41 of tornadoes, 231 of damaging winds and 72 of large hail between January 18th to 22nd.
Impact Forecasting notes that it was the first time that the SPC had declared a High Risk of severe weather for some parts of North Florida, including the city of Jacksonville.
“Due to the ongoing nature of extensive multi-state damage assessments, it remains too early to estimate a precise financial value for the totality of the event on an economic and insured loss scale,” Impact Forecasting explained.
However, given the wide scope of the damage witnessed and reported, and the reports out of Mississippi of at least $200 million of loss in one area alone, it is anticipated that “economic and insured losses will easily reach well into the hundreds of millions of dollars; possibly higher,” Impact Forecasting say.
They also note that; “It is worth noting that since at least 1980 there does not appear to be any precedence of a billion-dollar event during the month of January that has been entirely driven by the severe weather peril (tornado, hail, straight-line wind) in the United States.”
So far in 2017 the SPC reports 79 tornado reports, 67 on an inflation adjusted basis, which is high for this point in the year.
The tornado and severe convective weather peril has driven loss for the insurance-linked investment and ILS fund sector in recent years, with collateralised reinsurance contracts in the U.S. often covering the peril. This early outbreak could see the first need for ILS funds to consider the potential for loss attrition in 2017.