severe thunderstorm

A severe weather outbreak across the US midwest over the last few days is likely to have created more than $5 billion in losses for the insurance and reinsurance industry, perhaps making this outbreak the largest severe weather loss event of 2025 so far, according to BMS Group Senior Meteorologist Andrew Siffert.

A number of aggregate catastrophe bonds have already seen their annual deductibles severely eroded by previous catastrophes and with this weekend’s severe weather activity in the United States providing a reminder of the tornado threat, cat bond fund manager Icosa Investments has cautioned investors to assess the risk of certain deals wisely.

Insurance and reinsurance broking group Aon has launched a new catastrophe model to analyse the impact of Severe Convective Storms (SCS) in the United States, allowing re/insurers to make better decisions on portfolio management for this expanding and increasingly costly peril.

Severe convective storm (SCS) losses in the United States drove insurance and reinsurance market losses of $50 billion to $60 billion in 2023, but while this was above-average, risk modeller Karen Clark & Company warns that annual losses from the peril could be much higher.

Industry insured losses from severe convective storms in the United States have already exceeded $31 billion, which makes 2024 one of the top-4 most costly years for the peril already, according to Steve Bowen, Chief Science Officer at reinsurance broker Gallagher Re.

With insurance industry losses from US severe weather events having already surpassed $10 billion this year and the toll from many events still being calculated, Andrew Siffert, Senior Meteorologist at insurance and reinsurance broking specialist BMS, has warned that forecasts for the coming days and weeks could take the toll on par with last year.

According to global reinsurance giant Swiss Re’s sigma research team, insured losses from severe thunderstorms reached a record high of US $60 billion in 2023, while overall natural catastrophe insured losses are estimated to have surpassed $100 billion again in 2023.

Insurance and reinsurance market losses from the severe convective storm (SCS) peril in Europe are starting to run a little ahead of losses from the more widely accepted European peak peril of extratropical windstorms, according to data from Aon’s Impact Forecasting.

As participants in the insurance, reinsurance and insurance-linked securities (ILS) industry grapple to understand the extent of their possible exposure to the severe convective storms and tornadoes of recent days, AM Best has warned that loss events like this will drive a re-examination of aggregate reinsurance pricing and supply.

Our sister publication Reinsurance News surveyed a segment of its industry readership as to how high they anticipate the insurance and reinsurance market loss from the recent severe storm and tornado outbreak will rise, with the largest percentage opting for between $2.5 billion and $5 billion.