Losses from recent bouts of severe convective weather and thunderstorms in the United States are set to drive insurance and perhaps reinsurance market losses into the hundreds of millions at least, according to Aon’s Impact Forecasting.
The season is generally accepted to begin in early spring, although of course severe convective weather can occur at any time, but this year it had been expected that a vigorous start to the severe thunderstorm and tornado season would be seen.
Insurance and reinsurance broker Aon’s Impact Forecasting division reports that the tornado outbreak that occurred between March 16th and 18th saw at least 48 confirmed tornadoes forming, of which 25 occurred in the State of Alabama.
Four of the surveyed tornadoes have so far been assigned an EF2 rating on the Enhanced Fujita Scale from this outbreak.
The tornadoes, combined with large hail and strong straight-line winds, “generated notable damage to structures, outbuildings, and vegetation across portions of the Southern Plains, Deep South, and Southeast,” Impact Forecasting said.
Most affected were regions of Alabama and Mississippi and overall this three day tornado outbreak is anticipated to drive insurance market losses of more than $200 million.
From March 22nd to 25th and continuing overnight, further outbreaks of severe convective weather, thunderstorms, large hail and tornadoes or straight-line winds have been experienced across the Southern Plains, Lower Mississippi Valley, Deep South, and Mid-South, Impact Forecasting reports.
Texas was hit during this period, with a number of instances of large and damaging hail, strong straight-line winds, and tornadoes.
Yesterday, March 25th, a significant severe weather event broke out across the Southeast and Tennessee Valley, which included a High Risk warning (level 5 out 5) for severe storms and damaging tornadoes.
Badly affected were areas of Alabama (with two large tornadoes seen near Cooper, southeast of Birmingham and near Centerville), Mississippi, and Tennessee and also very recently overnight Newnan in Georgia, where another large tornado is believed to have hit during the hours of darkness.
Aon’s Impact Forecasting reported that at least five fatalities had been confirmed on March 25th from this outbreak. But with this event ongoing the number could rise.
Aon’s unit said that it expects total economic and insurance market losses from this outbreak to reach well into the into the hundreds of millions (USD).
With this event having stretched through the last 12 hours or more the tally of economic and insurance or reinsurance market loss will take some time and the full extent of the damage is unlikely to be known until daylight hours.
The expectation is that these severe weather outbreaks are going to continue over the coming weeks through this peak time for tornadoes and similarly warned thunderstorms.
It’s still very early in that season as well, so the bill for the insurance and reinsurance industry could rise, but as ever, when it comes to tornadoes, location is everything and it is those that strike densely populated regions, or metro areas, that cause the greatest financial damage and loss of life.
Impact Forecasting notes that 2020 was the costliest year on record for the severe convective storm peril, with the latest industry loss tally now sitting at $36 billion.
Every year since 2008 has seen over $10 billion of insured losses from severe convective weather and hail is a major contributor to this, while tornado heavy years and derechos can see the highest individual event losses.
Register today for ILS Asia 2023, our next insurance-linked securities (ILS) market conference. Held in Singapore, July 13th, 2023.
Get a ticket soon to ensure you can attend. Secure your place at the event here!