Insurance and reinsurance industry losses from severe convective thunderstorm weather, so including from tornadoes, hail and damaging winds, are already on their way towards $2 billion in 2017.
According to the latest report from Impact Forecasting, the risk modeling and analytics center of excellence at reinsurance broker Aon Benfield, the most recent spate of severe thunderstorm outbreaks across the Midwest to the Northeast, will have added hundreds of millions of insured losses to a 2017 tally that already stood at $1.5 billion before this latest outbreak.
Severe weather outbreaks this week brought numerous tornadoes, severe hail storms and damaging synoptic and straight line winds to a wide swathe of the United States.
Impact Forecasting reports that at least four people died in the outbreak, which saw dangerous thunderstorms crossing the country from February 24-25 and February 27-March 2, with the second of these outbreak periods the most intense and damaging.
The first of these outbreaks saw multiple tornadoes striking the Northeast, including the first February tornado witnessed in Massachusetts since records began in 1950.
The second outbreak began across the Midwest and Plains before later shifting towards the Tennessee Valley and Mid-Atlantic. Dozens of tornadoes were recorded in this second outbreak of severe convective weather, with large hail, straight-line winds and at least five tornadoes that were confirmed as EF3 (Enhanced Fujita scale).
NOAA’s Storm Prediction Center (SPC) received at least 1,122 total local storm reports (LSR) during the two outbreaks, with 44 tornadoes, 753 reports of damaging winds, and 325 reports of large hail.
Damage assessments continue, Impact Forecasting said, which means that any estimates at this stage are likely to rise.
“The large footprint of tornado, hail, and straight-line wind damage has prompted a high volume of claims filings,” Impact Forecasting reported, meaning that, “Total economic and insured losses are minimally expected to reach into the hundreds of millions (USD); possibly higher.”
During the first seven weeks of the year, before these two recent outbreaks of severe convective weather, Impact Forecasting already tallied 2017 insurance and reinsurance losses from tornadoes, large hail and damaging synoptic winds at almost $1.5 billion.
That means that with the damage caused by these two outbreaks, the total insurance industry loss from severe convective weather could be getting close to $2 billion already in 2017.
As we’ve explained before, the ILS market is taking an increasing share of these types of loss events through the growth of collateralized reinsurance and also ILS investors can take an additional share through quota-share sidecars owned by the major reinsurers.
As ever, these events are not enormous losses at this stage on their own, but as they aggregate upwards throughout the year they can pose an increasing threat to ILS funds and other collateralised reinsurance vehicles.
Impact Forecasting notes that this follows on from a 2016 when the insurance and reinsurance industry paid out nearly $17 billion in claims for severe convective storm losses.