US Convective Storm Losses Mount As Global Catastrophes Costs Drop
While global catastrophe losses have hit a five-year low, losses from severe convective storms and hail in the U.S. and North America continued a disturbing upward trend, according to a recent report from Aon Benfield. Severe thunderstorm perils — including tornado, hail and straightline winds — were the costliest for the global insurance industry for the second consecutive year, according to Aon Benfield’s January 2015 Reinsurance Market Outlook. In addition, U.S insurers have had more than $10 billion in claims payouts from thunderstorms in every year since 2008, the report notes.Prior to 2008, the U.S. industry had only had one such year that topped $10 billion.
“The United States is the undisputed leader in severe weather and resultant losses given the unique geographical layout that is highly conducive for thunderstorm development,” according to Aon Benfield, adding that “pockets” in the U.S. including Central Plains, Southeast, Midwest and the Rockies are often the loss leaders.
The increased losses have also occurred during a multi-year decline in tornado activity, meaning that the biggest driver of increased payouts has been hail and wind, the report argues.
“While much of the media attention is often focused on tornadoes, industry officials are quick to confirm that the majority of the losses resulting from thunderstorm claims are due to hail,” the report states. “Assessors often report that hail stones ranging from pea-sized to as large as softball sized can many times lead to a total loss that is costly for the insurer.”
According to NOAA’s National Severe Storms Laboratory (NSSL), there are an estimated 16 million thunderstorms worldwide each year (including 100,000 alone in the U.S.) and roughly 2,000 thunderstorms in progress at any given moment, the report states.
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