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U.S. property/casualty insurers will see insured losses of more than $10 billion from a series of winter storms across the U.S. that caused widespread catastrophic freeze and significant power outages in Texas, catastrophe risk modeling company AIR Worldwide said in a report Thursday.
The significant number of expected claims, average claims values for commercial risks upward of $30,000, and $15,000 for residential risks, and the level of demand surge, are likely to push losses over $10 billion, AIR, a Verisk business, said in a statement.
However, there are various factors that could drive the loss well in excess of that figure, AIR said.
These include a higher-than-expected rate of claims among those risks affected by prolonged power outage, whether utility service interruption coverages pay out, larger than expected impacts from demand surge, government intervention and whether claims from mold damage start to emerge as a significant source of loss.
Reports suggest that many industries within the manufacturing and energy sectors in Texas were disrupted due to rolling power cuts, which could ultimately result in large claims, AIR said.
Water damage caused by frozen and burst pipes will also be a major source of claims.
“Among commercial risks, multiple reports have indicated that smaller commercial risks are bearing most of the loss, with schools especially hard hit,” AIR said in the statement.
The freezing temperatures — many of them records — and winter precipitation hit Texas and the southern U.S. on Feb. 13 and lasted through Feb. 18.
More than 800,000 commercial/industrial risks and close to 12 million residential properties were in the areas of Texas impacted by the event, AIR said.
While there is still uncertainty, around 80% of the claims count is expected to come from personal lines, AIR said.
(Reuters) – Insurers could suffer record first-quarter catastrophe losses after the historic Texas winter storm, which crippled the state’s electrical grid and caused extensive property damage including collapsed roofs and broken pipes, rating agency A.M. Best said late Friday.