U.S. severe weather in May to drive $2bn or greater financial impact: Aon

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Impacts from severe convective weather, thunderstorms, tornadoes and hail in the United States during May 2019 looks set to result in somewhere around $2 billion or more of economic costs, with most of the wind and hail loss falling to re/insurance capital.

Weather image from DreamaticoAon’s latest catastrophe report by its Impact Forecasting unit for the month of May details close to $2 billion in overall costs from seven specific outbreaks of severe thunderstorm and convective weather.

Following May, Aon believes that 2019 will become another year where insurance and reinsurance markets pay for over $10 billion of payouts due to severe convective storms.

In May, Aon’s experts say that from the seven outbreaks of severe convective storms that swept across central and eastern parts of the United States nearly 4,400 individual reports of tornadoes, hail, and straight-line winds were recorded, which is the highest figure in May since 2011.

May was particularly active, in terms of tornadoes, hail and straight line and damaging winds, with numerous supercell thunderstorms that damaged a wide swathe of the country.

Steve Bowen, a Director and Meteorologist from Aon’s Impact Forecasting team, commented, “Historically, May has been the most active month for tornadoes in the United States and 2019 was no exception, with the highest May tally since 2015. A persistent weather pattern led to several multi-day outbreaks of severe weather that resulted in tornadoes, large hail, damaging straight-line winds, and record-breaking rainfall which had a considerable impact on property and the agricultural sector.

“Severe convective storms have resulted in at least USD10 billion in U.S. insurance payouts annually since 2008, and we are likely headed towards a 12th consecutive year.”

One outbreak alone, between May 4th and 10th and largely affecting the Plains, Midwest and Southeast, is expected to result in at least $875 million of costs, the majority falling to insurance and reinsurance interests.

Another outbreak from 16th to 17th May is thought to have cost at least $425 million, with another on the 13th $290 million or more, while another four outbreaks during the month are thought to have driven at least $100 million of costs each, figures which are destined to rise given the recency of these events.

Aon already confirms at least $1.16 billion of insured losses from the three severe weather outbreaks to which numbers have been applied, while it remains uncertain how much of the other loss events will fall to insurers.

Adding to the losses are record floods, as extreme rainfall in Oklahoma and Kansas drove historic flooding throughout the Arkansas River Basin, accompanied by remnant flooding in the Missouri and Mississippi River Basins.

Aon suggests the flooding could drive another multi-billion economic cost, some of which will fall to private insurance and perhaps reinsurance.

While May has been an expensive month, it’s far from the most expensive seen for tornado damages, but it’s important to remember the convective storm season has a fair way to run, and large hail in particular can affect the U.S. and drive significant losses at almost any time of the year.

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