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Spring storms expected to cost insurers over $1B: Aon

Spring storms

Insurers are expected to pay out over $1 billion in insured losses as a result of severe storms, including hail, thunderstorms and tornadoes across the United States in April, according to a report Monday from Aon PLC.

Nearly 250 tornadoes touched down in the U.S. during April 2019, the highest number for that month since 2011, which led to multi-billion-dollar thunderstorm economic losses, according to Aon PLC’s global catastrophe recap.

One of two major tornado outbreaks in April swept across southern and eastern parts of the U.S. April 13-15, causing at least nine fatalities and widespread damage, the report said.

This outbreak was marked by 70 tornado touchdowns, up to baseball-sized hail, and damaging, straight-line winds gusting to 100 miles per hour across the hardest-hit states of Texas, Louisiana, Arkansas, Mississippi and into the Midwest, Southeast and mid-Atlantic regions, causing total economic losses of up to $925 million, with insurers covering around $700 million.

Two days later, the second major tornado outbreak struck central and eastern parts of the U.S. April 17-19, causing at least four fatalities, the report said.

This outbreak, with straight-line winds and large hail, saw at least 96 tornadoes across a dozen states, of which nearly half were recorded in Mississippi, causing total economic losses in the hundreds of millions of dollars, with a majority expected to be insured, Aon said.

The Southeast had also been struck by severe thunderstorms resulting in softball-sized hail and damaging, straight-line winds April 5-8, according to the report. Texas saw the most significant hail damage, with other parts of Louisiana, Mississippi and Alabama also affected and total economic losses put at $250 million and up, with insurers covering roughly $190 million, the report said.

“April is often defined by severe convective storms across North America. While thunderstorms produced notable tornado, hail, and non-tornadic wind damage in the United States, there was particular focus on widespread flooding in the U.S. and Canada. The multi-billion-dollar uninsured cost of the flood events – including those in the Missouri, Mississippi, St. Lawrence, Ottawa, and Saint John River Basins – has once again exposed the existing protection gap within mature insurance markets for a specific peril,” said Steve Bowen, director and meteorologist within Aon’s Impact Forecasting team.

“Determining best practice approaches to understand flood risk and further encourage insurance take-up should help lower this gap and minimize the financial burden on affected residents.”

Also notable during the month was a wave of severe weather, including 17 tornadoes, damaging winds and flash flooding that struck parts of the Plains and Southeast April 23-25, Aon said in the report. Texas and Louisiana bore the brunt of the impacts, and total economic losses were expected to reach into the hundreds of millions of dollars, with insurers covering most of the costs, Aon said.

Another series of storms saw tornado touchdowns and torrential flooding rain across parts of the Plains, Midwest and Southeast April 30 to May 2, resulting in at least five fatalities, according to the report. More than 41 confirmed tornadoes were cited in Oklahoma, Texas, Missouri and Arkansas with a flash flood emergency declared in Davenport, Iowa, after a levee failed along the Mississippi River and further flooding in Illinois, Missouri and Kansas. Total economic losses were expected to reach into the hundreds of millions with most of the nonflood damage costs insured, the report said. 

Elsewhere in April, torrential rainfall in Rio de Janeiro, Brazil, resulted in at least 10 fatalities and damage to residential and commercial properties, vehicles and infrastructure, resulting in economic damage forecast in the millions of dollars, Aon said.

Parts of South Africa were also hit by widespread flooding and mudslides following heavy rain, leading to 87 fatalities and “notable damage” to local infrastructure, the report said. In Durban alone, the economic cost was ZAR660 million ($50 million), Aon said.





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