Impact of spring weather on carriers, claims and appraisals

Every year billions of dollars are attributed to weather-related losses. The violent phenomena that cause havoc one year might not have as much of an impact the next, making it difficult to anticipate weather-related fluctuation of claims volume. Over the last several years we’ve seen the average costs of comprehensive losses increase steadily.  Erratic weather patterns are usually to blame for the large increases in comprehensive losses. Many of the major storms in the last few years have involved significant flooding, hail and strong winds, where vehicle owners are given little warning to move their vehicles to a safer location. This past spring, severe weather made a significant impact on claims costs and frequency.

According to Aon Benfield’s Global Catastrophe Recap report, through the end of May 2014, tornado activity in the United States remained in the bottom 25th percentile of all years dating to the early 1950s. Though U.S. tornado activity in May this year remained low in relative terms, severe storms and large hail caused $1 billion in damage in the Midwest, Plains, Rockies, Mid-Atlantic and Northeast. During May 2014, overall economic losses of at least $3.5 billion were estimated and aggregate insured losses exceeded $2.2 billion in the U.S. While the occurrence of wind-related severe events were fewer through May 2014, insured losses were sizeable with large hail and damaging winds serving as the primary driver of the thunderstorm-related costs. Matthew Nielsen, a director and meteorologist at RMS, attributes 60% of average annual storm losses in the U.S. to hail damage, indicating its significant economic impact.