U.S. weather & catastrophes drive over $23bn economic costs in August: Aon

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Severe storms, convective weather and large hail across the eastern two-thirds of the United States from August 8th to 12th, including the Derecho that struck the Iowa and Illinois region, is estimated to have cost around $6.5 billion, with more than half of the total likely covered by insurance.

Weather image from DreamaticoThe Derecho event swept through Iowa and Illinois on August 10th causing widespread damage and having warned previously that this could be a multi-billion dollar loss event, insurance and reinsurance broker Aon’s Impact Forecasting division now explained that the Derecho alone is estimated to have caused $5 billion of economic losses.

Again, as much as half (or more) of this is expected to fall to the insurance and perhaps reinsurance industry, ensuring that alongside hurricane impacts from Isaias, Marco and Laura, as well as the ongoing wildfires, August has been a particularly costly month for re/insurers.

For the United States alone, August’s severe weather and natural catastrophe economic losses are almost certain to reach over $23 billion, based on the data provided by Aon. A very costly month.

Aon’s Impact Forecasting pegs hurricane Isaias as a $5 billion plus economic loss, with more than half covered by insurance.

Hurricane Marco was less impactful and is seen as only driving losses in the low-digit millions.

Hurricane Laura’s more severe impacts are seen as at least a $10 billion economic loss, with “The portion covered by public and private insurance entities also expected to result in a notable multi-billion-dollar payout.”

Around the globe there were nine tropical cyclone events, including the U.S. storms, that between them drove over $20 billion of economic losses.

While in China the severe costs associated with flooding continue, as seasonal economic losses from monsoonal rains reached a stunning US $28 billion.

With the wildfires now raging and becoming increasingly costly, Aon notes at least $1 billion so far, but after yesterday’s damage this could already be higher and as we said earlier the wildfire season is almost certainly heading for a multi-billion dollar industry loss range.

Steve Bowen, director and meteorologist on the Impact Forecasting team at Aon, commented on August’s losses, “North America and Asia endured another impactful month of weather disasters in August. Tropical cyclones, severe convective storms, and wildfires all left numerous financial and humanitarian challenges in their wake as the globe continues to deal with implications stemming from the COVID-19 pandemic. The focus for re/insurers went beyond just tropical cyclone activity, however, as a historic derecho in the United States left a multi-billion-dollar insurance pay-out to property and agribusiness owners, and early season wildfires destroyed thousands of structures across California. Record seasonal monsoon flooding in parts of Asia only further highlighted the significant protection gap that exists in highly vulnerable and exposed areas.”

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