Severe thunderstorms caused more than $6 billion in insured damages during the first six months of 2009, making it the leading cause for insurance losses so far in what has been called a moderate year for natural disasters.

These figures and others were discussed during a web seminar hosted by Munich Re titled, “First-Half 2009 Natural Catastrophe Update.” The speakers for the event included Carl Hedde, head of risk accumulation for Munich Re America; Prof. Dr. Peter H?ppe, head of geo risks research/corporate climate center for Munich Re; and Dr. Robert Hartwig, president of the Insurance Information Institute (I.I.I.).

Hartwig offered some insights as to why severe thunderstorms are increasing loss severities.

“One dimension of thunderstorm losses is going to be wind-related,” he said. “But what [I.I.I.] noticed is a marked trend in terms of the associated losses from the lightning component. In fact, last year we showed for the first time ever that lightning losses alone exceeded $1 billion. The reason for this, we believe, is the fact that homes are absolutely loaded with electronics today. That part of the loss, particularly with homeowners but also businesses, is growing very, very rapidly.”

Thunderstorms might have been the leading cause of insured losses, but other natural disasters also registered significant claims. Hedde reported that an early start to California wildfires — a season that generally begins in earnest in the second half of the year — has already resulted in $120 million in losses. Tornado counts were at near average, with roughly 890 tornados forming so far. In total, U.S. insured losses for natural disasters topped $11 billion. Somewhat surprisingly, however, is the quiet storm season in the Atlantic, which meant that no losses have been attributed to cyclonic activity through July. That was good news, but Hartwig was cautious in expressing optimism.

“We've heard that catastrophe losses are below where they were last year, but catastrophe losses in the U.S. are back-ended,” said Hartwig. “By that, I mean the second half of the year — and the third quarter in particular — is when the lion's share of losses occur because that's when the hurricane season peaks, as was the case last year with Hurricane Ike and other events.”

Hartwig also noted other economic challenges to insurers, including catastrophic financial conditions that reduced investment gains by 51 percent in 2008. Another drop is expected in 2009. But he stressed that insurers have, by design, been able to handle the difficulties.

“The industry remains well capitalized despite the financial crisis, despite the recession, and despite last year's catastrophe losses,” said Hartwig. “In other words, it's a very resilient industry that is designed to withstand major catastrophes and market crashes simultaneously. Insurance markets continue to operate normally, and the industry's promise to pay remains in tact.”

Special Reports /

Thunderstorms Top First-Half Catastrophes

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