Aon analysis of the devastating tornado outbreak which swept several US states over the weekend echos other outlet’s in its expectation for both economic and insured losses to reach into the billions of dollars.
Analysts note how the severe convective storm (SCS) peril has become an increasingly expensive one for insurers, governmental agencies, and humanitarian aid groups.
The widespread scope of the damage footprint from the severe thunderstorm outbreak is said to require a prolonged period of assessment to gain a full view of the event.
However, given the substantial nature of damage across a high volume of residential properties and some major commercial facilities, there is an expectation that the total economic loss will very likely reach into the billions of dollars.
Given that most wind- and hail-related damage is often covered by a standard policy, it is anticipated that there will be a multi-billion-dollar loss for the insurance industry also.
Despite the elevated expected loss for insurers, Aon states that the total is likely to represent a manageable number for the overall industry.
At this time, only a limited portion of the loss is expected to be ceded to reinsurance.
While peak SCS events tend to be much less expensive than the largest tropical cyclone or earthquake events, the annual aggregate of the SCS peril has become a dominant driver of industry payouts.
The frequency of $500 million or $1 billion SCS events has notably grown in the past 10 to 15 years.
