Reinsurance News

Adverse weather in March drives $3bn economic loss in the U.S: Aon Benfield

6th April 2018 - Author: Luke Gallin

According to reinsurance broker Aon Benfield’s catastrophe risk modelling unit, Impact Forecasting, active weather events in March are expected to cost the U.S. economy $3 billion, with approximately $2 billion of this being assumed by insurers and reinsurers.

Thunderstorm imageImpact Forecasting has released its March 2018 Global Catastrophe Recap report, which states that the month witnessed the first notable severe weather outbreaks of 2018 in the U.S., which includes the first EF3 tornado touchdown in the U.S. for a record 306 days.

This tornado, combined with winter storms, flooding and severe weather, is expected to result in economic losses of $3 billion, with Impact Forecasting stating that around two-thirds of this, so $2 billion, will be covered by insurance.

Outside of the U.S., drought in Argentina and Uruguay impacted agricultural sectors, and is expected to drive economic losses of $4 billion, much of which is unlikely to be insured as a result of the low levels of insurance penetration across much of South America.

“With an expected multi-billion dollar impact to the agricultural sectors in Argentina and Uruguay alone, this puts additional focus on how costly the drought peril can be and the importance of crop insurance. Lingering La Niña conditions during the austral summer has led to a continued severe lack of rainfall across parts of South America.

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“This further signifies the sensitivities of weather patterns surrounding the phase of the El Niño-Southern Oscillation (ENSO), marked by changes in sea surface temperature and wind patterns in the Eastern Pacific Ocean, and how it can influence different types of disaster risk on a global scale,” said Steve Bowen, Impact Forecasting director and meteorologist.

Elsewhere in the world regional flooding impacted parts of Australia in March, while bushfires hit New South Wales and Victoria, along with the impact of Tropical Cyclone Marcus on Northern territories.

Impact Forecasting also explains that Papua New Guinea continued to be hit by a series of strong aftershocks following the earthquake that occurred in February, while a weak tropical storm named Eliakim hit parts of Madagascar.

Furthermore, two successive extratropical cyclones hit the Iberian Peninsula over March 9th – 14th, bringing strong winds to several Portuguese and Spanish regions. While other severe weather and flooding events were noted in parts of the U.S., Brazil, Turkey, Rwanda, Kenya, South Africa, Lesotho, and China, according to the report.

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