Tag Archives: U.S. severe convective storms

Spring into Action: U.S. Severe Convective Storm Season Spins Up

Last weekend (April 13-14) marked the first major U.S. severe convective storm (SCS) outbreak of 2019. Drawing energy from warm, humid air brought over land from the Gulf of Mexico by a dip in the jet stream, hail, strong winds and/or tornadoes were reported in 19 states stretching from Texas to New York. There have been at least nine fatalities reported. The worst damage occurred in Texas, Louisiana, Mississippi, and Alabama, where over 150,000 homes and business lost power.

Damage surveys are ongoing, but as of April 16, there had been 22 tornadoes confirmed by the National Weather Service, including two EF-3 rated tornadoes in Texas, with estimated wind speeds of 140 miles per hour (225 kilometers per hour). Early assessments indicate that several hundred buildings have been damaged or destroyed, but the total number will unlikely be known for a few more days at least – and could be significantly higher. In the meantime, insurers will be sending out loss adjusters to try to establish the scale of the claims they are likely to incur. The final cost may not be known for several months.

But why is spring and not summer the peak season for SCS, what is the current state of SCS risk – and what has its impact been on the insurance industry over the past few years?

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U.S. Severe Convective Storm Claims Going Through the Roof

During the development of the current RMS U.S. Severe Convective Storm (SCS) model, we found that claims for U.S. Personal lines were growing much faster than general economic inflation. To update SCS claims trends and to try and understand what could be driving this hyper-inflation, we analyzed the new five-year dataset from 2013 onwards, and also a longer duration 17-year period from 2001 to 2017 when observation datasets are of best quality.

Trends in SCS Event Costs

We gathered SCS losses due to hail, tornado and straight-line wind sub-perils from all the information we have on U.S. client claims, which amounts to over one million claims and several billions of U.S. Dollars in total loss. Figure One below shows the time-series of annual SCS loss totals and the decomposition into claim frequency and severity for the period 2001 to 2017. The 7.5 percent per annum trend in claim severity and 3.3 percent per annum rise in frequency combine to produce a growth of total loss, or SCS claims inflation of 11 percent per annum over the 2001-2017 period.

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