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Thunderstorms pose a risk to U.S. property that equals hurricane risk, according to a new research study published by Willis Re.
The average annual loss from severe convective storms was $11.23 billion compared to $11.28 billion from hurricanes for the 2003-15 timeframe, according to the report compiled by Columbia University and published by the reinsurance division of London-based Willis Towers Watson P.L.C. on Monday.
The risk of severe convective storms was the largest annual aggregated risk peril to the U.S. insurance industry over the past decade, according to the report called “Managing Severe Thunderstorm Risk.”
The frequency of severe convective storms in the U.S. is higher following La Niña and lower following El Niño, according to the report. El Niño-Southern Oscillation is an ocean-atmosphere interaction in the tropical Pacific that influences weather and climate patterns around the world. El Niño events are characterized by warmer-than-usual sea surface temperature in the eastern and central tropical Pacific, and La Niña events are characterized by cooler-than-usual sea surface temperature. Roughly half of all years are classified as either El Niño or La Niña while the other half are considered neutral.
“Regional variability in increased or reduced severe convective storm frequency due to the El Niño Southern Oscillation phase can have a significant impact on regional and single-state property insurance companies,” Prasad Gunturi, executive vice president, Willis Re, said in a statement.
The report aims to increase understanding of the impact of the El Niño-Southern Oscillation on tornado and hail frequencies and introduce the concept of ENSO-conditioned event rates. Using data from Columbia researchers, Willis Re now plans to produce monthly forecasts of tornado and hail activity that can help companies identify a month in advance what exposure concentrations may be at increased risk to tornado and hail storms compared to historical average activity.
The deadly storms that hit Texas this week have resulted in over $6 billion in insured losses, an industry analyst said, with the potential for more losses this weekend.