Forecasts indicate that US severe weather losses could run on par with 2023, BMS’s Siffert

Insurance industry losses from US severe weather events have already surpassed $10 billion for this year, with the toll for many events still being calculated. However, forecasts for the coming days and weeks could wind up taking the toll on par with last year, warns Andrew Siffert, Senior Meteorologist at BMS.

Siffert explains that over the last five years, industry losses from severe weather have totalled, on average, $14 billion, with the previous year seeing a record $21 billion in the first four months of 2023.

In his latest blog post for BMS, Siffert said: “This year, there have already been four $1B+ loss events due to severe weather for the insurance industry, while last year, there had been six $1B+ events by the end of April.”

He goes on to explain, that given the forecast and a few days left in the month, there is a “good chance the insurance industry could round out the months with some significant loss events that put 2024 on par with 2023,”

He also noted that severe weather losses are heavily influenced by the location of the events.

“So far, during this U.S. severe weather season, the insurance industry has seen slightly below-average tornado counts at 347 (410, 2005-2023 Avg). Interestingly, without two major outbreaks of tornadoes that occurred on March 13-15 and April 1-2, accounting for 150 tornadoes over the two outbreaks, the overall count of tornadoes would be well below normal for the season,” he said.

Hail counts are also running behind the average 1,183, with the average being 1,665 for 2005-2023.

However, wind damage reports from thunderstorms are just above average at 2,184, with the average being 2,081 for 2005-2023.

Siffert explained that this variability in severe weather events underscores the importance of location in determining insurance losses.

On average, the US experiences around 1,225 tornadoes annually, with the season usually ramping up from March through May, with the peak in May.

“Like clockwork, the insurance industry should expect some big outbreaks over the next few weeks. Again, what matters, though, is where the severe weather occurs. This year, the severe weather hot spots seem focused early within the Midwest, Ohio River Valley, and along the Gulf Coast,” Siffert explained.

He also added that hail typically causes 50% – 80% of the overall insured loss from severe weather perils, whereas the tornado risk drives the longer tail occurrence of loss for the insurance industry.

Furthermore, he also notes that the forecast calls for a very active period between April 25 – April 29 of severe weather across the central US, which is all due to a series of short waves in the jet stream that will move across the country.

He said: “These waves allow kickers of cold air to slide south and east, which will collide with warm, moist air from the Gulf of Mexico. When combined with the jet stream momentum aloft, this could boost wind shear or cause a change in wind speed and/or direction with height. In turn, these factors could foster spinning storms, allowing for potentially memorable tornadoes to form over more traditional parts of Tornado Alley.”

Interestingly, Siffert added that some analogs for the next few days forecasts “might be eye-opening for the insurance industry.”

He went on to say that “The long-range forecast models suggest this active pattern of severe weather could continue into the first two weeks of May.”

The post Forecasts indicate that US severe weather losses could run on par with 2023, BMS’s Siffert appeared first on ReinsuranceNe.ws.

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