As more insurers begin to make second-quarter loss estimates from tornado-spawning storms that ravaged parts of the U.S. in April and May, Aon Benfield says insured losses for the two months are nearly triple the annual average over the last 20 years.
Losses from the thunderstorms in the two-month span reached about $15 billion, says Aon Benfield, the global reinsurance intermediary of Aon Corp. Economic losses stand at an estimated $21.65 billion.
A new report from the firm breaks down the severe weather events into eight timeframes, five of which were billion-dollar-plus catastrophes.
The costliest was a set of storms April 22-28 that cost insurers an estimated $5 billion in losses. This period included 334 tornadoes, the largest outbreak in history. An EF4 tornado hit Tuscaloosa, Ala. and at least three EF5 twisters touched down elsewhere in the Southeast and Tennessee Valley during this time span, according to Aon Benfield.
Storms from May 21-27 caused an estimated $4.5 billion in insured losses. This system included an EF5 tornado that touched down in Joplin. Mo.
Adding weather events as of mid-June, insured losses total at least $15.5 billion. Average annual insured losses from severe weather from 1990-2010 are about $5.5 billion, adds Aon Benfield.
Catastrophe risk modelers' estimate insured losses of between $2 billion and $6 billion for the late April tornado outbreak. AIR Worldwide adds up to $7 billion in losses due to late May storms.
The tornado outbreaks led to a historic number of deaths—585 in the eight events highlighted in Aon Benfield's report and more than 150 in Joplin alone. The reinsurance intermediary comments on the loss of life, surmising that several factors are involved: population growth, tornado strength, time of day, building type and building strength.
Insurers are releasing their individual estimates in advance of their second-quarter financial results.
The Chubb Corp. says it expects losses of between $250 million and $310 million, pretax, for the April and May storms.
Hamilton, Bermuda-based specialty insurer Alterra Capital Holdings Limited says its initial loss estimate for the storms is between $18 million and $28 million, pretax and net of reinsurance and reinstatement premiums.
Zurich Financial Services Group says it expects $295 million in losses, net of reinsurance and before tax, for both Zurich North America and Farmers Re.
Zurich says its Commercial and Global Corporate businesses in North America are expected to take $200 million of the loss, while Farmers Re is expected to take the remaining $95 million. For Farmers Re, Zurich says the losses reflect reinsurance coverage provided to the Farmers Exchanges, which are managed but not owned by Zurich subsidiary Farmers Group.
Farmers Exchanges expect losses from the storms to be about $400 million, Zurich says.
Greenwich, Conn.-based insurer W. R. Berkley Corp. says its estimated pre-tax losses are $65 million. The preliminary estimate exceeds the losses contemplated in the company's budget for the full second quarter by approximately $35 million, Berkley says.
The Ohio Insurance Institute (OII) says storms from May 20-26 resulted in at least $322 million in insured losses in the state, making it the third costliest natural disaster in state history.
The companies responding to an OII survey account for 82 percent of the auto-insurance market, 79 percent of the homeowners' insurance market, and 31 percent of commercial insurance in Ohio.
The companies reported losses of between $15,000 and $101.5 million, says OII, with homeowners claims accounting for $214.9 million of the $322 million total.
These estimates came shortly after State Farm, the top writer of personal lines in the U.S., said it has logged more than 400,000 home, business and automobile claims and paid out $1.75 billion for the storms.
State Farms says in a statement that if it were to classify all the tornadoes, windstorms and hail in April and May as one event, it would become the fifth-costliest homeowners' catastrophe in 90 years.
Allstate previously said it expects to pay out around $2 billion for April and May events.
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