According to BMS Re, a specialised reinsurance broker, and available industry data, it is estimated that the insured losses caused by severe weather events such as hail, tornadoes, and thunderstorm wind gusts in the US during the first-quarter amount to a range of $7 billion to $9.5 billion.
“Losses are still developing, but the initial estimates provide a large aggregate loss that has occurred over 12 severe weather events since January 1st,” the broker said.
The primary factor leading to losses is anticipated to be three events worth over $1 billion in March. These events consist of tornado weather systems in Rolling Fork, MS, and Little Rock, AR, which had a more extensive impact area than the actual tracks of these tornadoes.
“With the understanding that the insurance industry is already in a heightened inflation era, even Consumer Price Index (CPI) loss adjustments must be taken with a grain of salt,” the broker explained. “Still, on a CPI-adjusted basis, the January – March first quarter U.S Severe weather losses appear to be at or close to a modern-day record,” it added.
While 2008 and 2011 have been the most recent years considered as benchmarks for severe weather based on reports, this year stands out due to the significant and consistent decrease or stability in severe weather incidents in recent years, particularly for perils such as hail, the broker noted.
Severe weather losses depend on location and exposure, with hail being the primary driver, while tornadoes draw media attention and cause tail losses, making it difficult to predict the outcome of the upcoming season, it added.
“Overall, the climate forcers explained above match closely with other active severe weather years like the 2011 season, which was very busy in April and May and resulted in the 2011 Tuscaloosa and Joplin tornado events.”
As a result of these climate influencers, the severe weather season in 2023 has been enhanced and is expected to persist beyond April, with a temporary high-pressure ridge causing a brief change in weather patterns in the central US. This ridge is expected to bring warmth to the upper Midwest and temporarily reduce the occurrence of severe weather in the Central Plains for a week or so, the broker concluded.
