According to a recent Swiss Re sigma report, the increasing losses from severe thunderstorms—which include hail, heavy rains and flash flooding, tornadoes, thunder and lightning—are a growing challenge for society and insurers alike. The localized nature of the storms means they can cause considerable damage to crops, and also to properties and vehicles when they hit densely populated areas.
Severe thunderstorms occur in many countries around the world, and the United States is no exception. The damage left in the wake of a severe thunderstorm can be extreme, and the impact and costs of such storms have been rising over the last 25 years.
The U.S. has more tornadoes than any other country in the world, which is due to its geography. Cold dry air from Canada and the Rocky Mountains, hot dry air from the desert southwest and warm moist air from the Gulf of Mexico all come together in the central U.S. In the spring, these air masses collide with the winds in the lower atmosphere coming from different directions at different speeds, causing thunderstorms to rotate. These rotating storms—supercells—are the source of the strongest tornadoes and largest hailstones. Up to 60 people die in U.S. tornadoes each year and 1,500 are injured.
$8B losses annually from severe thunderstorms
Between 1990 and 2014, insured losses from severe thunderstorms in the U.S. averaged $8 billion annually. Since 2008, those insured losses have exceeded $10 billion every year, including in 2014 which was the quietest year for tornado activity since the early 1990s.
According to the report, 2011 was the record year in the U.S in terms of insured ($28 billion) and total losses ($39 billion) from severe thunderstorms. Most of the losses were caused by tornado outbreaks. There were 1,690 tornadoes in the U.S. that year, and new records were set for the highest numbers registered on both a single day and in a single month. Two outbreaks in the southern and Midwest states in April and May caused the most damage.
The most damaging hail event ever recorded in the U.S. was in 2001, when a hailstorm inflicted severe damage on Kansas City, causing insured losses of $2.9 billion (in 2014 prices). The claims were mostly for vehicle and property damage.
Growing urban populations and valuable technology
Among the reasons for the rise in losses from severe thunderstorms are the growing exposures and increasing insurance penetration that come with expanding populations and urban centers and increasing values and technology at risk. For example, the U.S. states with the most severe thunderstorm activity have seen 15–48% population growth since 1990 and, in parallel, increasing risk exposure.
The multi-billion dollar severe thunderstorm loss events of recent years reaffirm the need for stronger mitigation measures, for example in building codes and construction practices.
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