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US tornado outbreak likely a multi-billion dollar event

13th December 2021 - Author: Charlie Wood

A devastating severe weather event consisting of intense tornado activity across US states Arkansas, Missouri, Tennesse, and Kentucky is expected to generate industry losses into the low single-digit billions of dollars.

Andrew Siffert, a Senior Meteorologist at insurance and reinsurance broker BMS Group, adds that December severe weather event typically fall into the $100 – $200 million range, and rarely exceed $500 million.

Many of the tornadoes were during the nighttime hours and have inflicted a death toll which at present appears to have climbed above 100.

This makes it one of the top 15 deadliest tornado days in US history.

The severe weather will continue to move into the East Coast of the US but is expected to lose much of its momentum.

Overall it would appear that hail, which is one of the drivers of the average annual loss for the insurance industry, was limited in this event.

The Quad State event costs will be driven by wind and tornado costs, notes Siffert.

Early indications suggest that one of the tornadoes is likely the first EF5 tornado in Mayfield, KY, ending a long-standing US EF5 tornado drought.

The last occurrence was 3,125 days ago on May 20, 2013, impacting Moore, Oklahoma.

So far, the NOAA Storm Prediction Center has 37 tornado reports and 258 strong wind and damage reports with some hail being reported in Texas and Arkansas, and Missouri.

A large proportion of catastrophic damage appears to be in Mayfield, KY; a large swath of the town was levelled.

According to FEMA, the general exposure in the census tract of Mayfield, KY that makes up the town of 10,000 easily reaches $1.2 billion in building value.

KBW analysts have called the losses manageable, noting an expectation for primary insurers to bear most of the insured losses but that this “unusual” weather should reinforce reinsurer resolve heading into 1/1 reinsurance renewals.

There is also an indication that one of the tornadoes might be one of the longest-lived tornado tracks in U.S. history, tracking over 250 miles.

The longest tracking tornado in history is 219 miles which occurred on March 18, 1925.

Tornado warnings associated with one of the tornadoes extended 385 miles with overall 146 tornado warning counts issued across several states.

Additionally, weather radar suggests that debris from one of the tornadoes was carried 7 miles into the air.

All of these snippets indicate a truly historic tornado outbreak.

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