AIR Estimates Tornado Insured Losses Could Reach $7 Billion
AIR Worldwide said the severe thunderstorms that struck the United States in late May will result in insured losses between $4 billion and $7 billion.
The estimate includes insured physical damage to property, living expenses for residential claims, business interruption losses and the effects of post storm demand surge. The estimate does not include non-modeled losses, such as loss adjustment expenses, the firm said.
The catastrophe modeling firm added that while the meteorological ingredients that created the tornadoes were common for the U.S. Midwest and south – such as a strong jet stream disturbance and a persistent low pressure frontal system — it was unusual for the factors to have “aligned themselves so optimally in the same place at an opportune time.”
“It is also becoming quickly apparent that 2011 will surpass 2008 in terms of insured losses from severe thunderstorm activity,” said Dr. Tim Doggett, principal scientist at AIR Worldwide in a statement. “Indeed, the two major outbreaks of this year—the first in late April, the second in late May—are the costliest on record.”
AIR said that Joplin, Missouri took the brunt of the storms with an “extraordinarily violent tornado” rated an EF5 on the Enhanced Fujita Scale. Winds from the storm reached at least 200 mph and cut straight through the city.
Earlier this month Eqecat placed its initial insured loss estimate for the Joplin area alone at $1 billion to $3 billion.
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