Reinsurance broker Aon Benfield’s latest Global Catastrophe Recap report, which reviews the natural disaster perils that occurred worldwide during March, highlights the growing losses that the reinsurance industry will face from the U.S. tornado season in 2012. The season has got off to an above average start again and the number of tornadoes to be recorded is currently well above the average expected for this time of year. We’re just entering the main season for tornado activity now so it looks like the 2012 season could be another large loss event for insurers and reinsurers.
Aon Benfield’s report discusses the early March outbreak of tornadoes which impacted midwest and southeastern areas and caused around $2 billion of economic losses and $1.1 billion of insured losses. Some other estimates put that spell of convective storms at up to $2 billion of insured losses, and with 170,000+ claims to assess the number is likely to rise somewhat. Other periods of severe weather in March will have pushed the insured loss total to over $1.2 billion according to Aon Benfield.
Steve Jakubowski, President of Aon Benfield’s Impact Forecasting division, said; “Following an active 2011 U.S. severe weather season, the first quarter of 2012 has also proven itself to be markedly busy. Through the first three months of 2012, we have already sustained more than USD1.8 billion in insured losses from convective storm events as we enter the climatologically most active severe weather months of the year. Despite the heightened activity thus far, it is nearly impossible to forecast and project losses for the rest of 2012.”
You can download the full report from Aon Benfield, which includes details of other catastrophe and weather disasters around the world in March here.
The graph below shows the number of recorded tornadoes (inflation adjusted) versus the percentile averages. The 50th percentile is generally accepted as a norm to compare against and as you can see there have been many more recorded tornadoes than average this year.
Whether this trend will continue is hard to tell. April has started off with a number of major convective storms adding to the damage toll. Back in March Standard & Poor’s issued an announcement stating that the above average start to the tornado season was not expected to cause any impact to tornado exposed catastrophe bonds. Most of those cat bonds collect losses on an annual aggregate basis though and we’ll have to wait for the season to progress further before being able to assume they are safe.