Category Archives: Thunderstorms

Lightning claims topped $800 million last year

Every year the Insurance Information Institute (I.I.I.) and State Farm recognize Lightning Safety Awareness Week (June 18-24) by estimating the toll of lightning claims in the United States, writes the I.I.I. research team. Last year insurers paid out nearly $862 million in lighting claims to more than 100,000 policyholders, a 4.5% increase from 2015.

Damage caused by lightning, such as a fire, is covered by most homeowners insurance policies.

Florida—the state with the most thunderstorms—remained the top state for lighting claims in 2016, with 10,385, followed by Texas (9,098), Georgia (8,037) and Louisiana (5,956).

Homeowners Insurance Claims and Payouts for Lightning Losses, 2007 – 2016

The Lightning Protection Institute (LPI) encourages homeowners to install a lightning protection system in their homes. Per Kimberly Loehr, communications director for LPI: “Lightning protection systems that follow the guidelines of NFPA are designed to protect your home by providing a specified path to harness and safely ground the super-charged current of the lightning bolt.”

To learn more about an LPI-certified lighting protection system, click here or visit lightning.org/find-an-installer.

May severe weather: multi-billion dollar insurance payout aids recovery

Severe weather across the United States in May resulted in combined public and private insured losses of at least $3 billion.

Aon Benfield’s latest Global Catastrophe Recap report reveals that central and eastern parts of the U.S. saw extensive damage from large hail, straight-line winds, tornadoes and isolated flash flooding during last month’s storms.

The most prolific event? A May 8 major storm in the greater Denver, Colorado metro region, where damage from softball-sized hail resulted in an insured loss of more than $1.4 billion in the state alone.

Check out I.I.I. facts and statistics on hail here. The National Weather Service has detailed information on severe storm events, including hail, tornadoes and wind. 2016 data on the number of hail events are posted online.

Total aggregated economic losses from U.S. severe weather in May were in excess of $4 billion, Aon Benfield said.

How to protect crops and property from hail

Damage to vineyards following several years of severe hailstorms in the famed wine-growing region of Burgundy, France, is prompting greater prevention efforts.

London’s Daily Telegraph reports that producers are protecting their entire grape harvest with a cloud-seeding system—a hi-tech hail shield that is designed to modify storm clouds and suppress hail formation.

The system works by releasing tiny particles of silver iodide into the clouds where they stop the formation of hail stones, thereby reducing the risk of damage.

Cloud-seeding, or weather modification, has been used for many years in parts of the United States and Canada not just to suppress hail, but to enhance rainfall and snowfall in some cases. Insurers are involved in the research.

This makes sense. According to the National Oceanic Atmospheric Administration, hail causes approximately $1 billion in damage to crops and property annually.

A monster hailstorm that pounded Colorado’s Front Range on May 8 is on pace to be Colorado’s most expensive insured catastrophe, with an estimated preliminary insured loss of $1.4 billion, according to the Rocky Mountain Insurance Information Association.

For auto, home and business owners living in hail-prone areas, taking steps to minimize hail damage to property is essential.

The Insurance Institute for Business and Home Safety (IBHS), is continuing a major multi-year research study into hailstorms. IBHS resources on preventing property losses are available here.

U.S. Thunderstorm Losses Add Up To Q1 Record

Topping $5.7 billion. That’s the record cost of insured losses from severe thunderstorms and convective weather in the United States in the first quarter of 2017.

The latest figures come via Steve Bowen, director and meteorologist at Impact Forecasting, the catastrophe risk modeling center at Aon Benfield.

Here’s the chart (via @SteveBowenWx):

Artemis blog offers this perspective:

“It’s the second year in succession that insurance and reinsurance markets have faced a heavy toll from severe thunderstorm related losses, which in turn means impacts to ILS [insurance-linked securities] funds and investors, as severe convective storm risk is a typical peril of many catastrophe reinsurance arrangements that ILS investments are linked to.

Beyond the first-quarter the expensive run-rate of losses from severe thunderstorms has continued, with some further outbreaks in the last fortnight.”

A recent Willis Re study found thunderstorms were just as costly to insurers as hurricanes.

Check out these resources (here and here) from the Insurance Institute for Business & Home Safety on how to protect your home and business from thunderstorms and tornadoes.

Register here for an April 27 Swiss Re and I.I.I. webinar on natural catastrophes.

I.I.I. facts and statistics on tornadoes and thunderstorms here.

Thunderstorms Most Costly U.S. Nat Cat in H1 2016

Severe thunderstorms accounted for the lion’s share of U.S. natural disaster losses in the first half of 2016, according to Munich Re.

Of the $17 billion in U.S. economic losses ($11 billion insured) caused by natural catastrophes in the first half of 2016, some $12.3 billion ($8.8 billion insured) were due to a series of storms in Texas and neighboring states, including destructive hailstorms in Dallas and San Antonio, and severe flooding in the Houston metro area.

Winter storms and cold waves were the next most costly U.S. peril in the first half causing insured losses of $1.5 billion, followed by flood and flash flood events with $1 billion in insured losses.

Wildfire, heatwaves and drought resulted in minor insured losses, and there were no losses due to earthquake or tropical cyclones in the first half, according to Munich Re’s Nat Cat Update.

USNatCatLosses2016H1MunichRe

Weather extremes in Texas and other southern states are symptomatic of an El Niño phase, which intensifies the subtropical jet stream, which can cause an increase in severe storms in the region, Munich Re said.

Further north, El Niño conditions also caused warm and dry conditions in Alaska and western Canada, helping to trigger the worst wildfire in Canadian history. Direct losses from these fires totaled $3.6 billion, of which $2.7 billion were insured.

The Fort McMurray fire has been declared the costliest natural catastrophe event in Canada’s history.

One beneficial aspect of El Niño conditions is that it tends to reduce springtime tornado activity over the southern Great Plains. While the year’s thunderstorm season got off to an early start, the states of Texas, Oklahoma, and Kansas have all seen about 50 percent fewer tornadoes this year than in the first half of 2015, Munich Re observed.

Nationally, the number of observed tornadoes was about 700 by the end of June, significantly below the average of 1,021 for the last 10 years.

Tony Kuczinski, president and CEO of Munich Re America, Inc, noted that homes and businesses incur the brunt of thunderstorm losses.

“Property damage from this spring’s thunderstorm season remind us that a roof is a building’s first line of defense against hail and wind events. Proper roof maintenance, roofing materials and installation are all critical to helping reduce these types of losses.”

To help homeowners build safer, stronger structures in the face of increasing severe weather events, Munich Re and the Insurance Institute for Business and Home Safety (IBHS) recently launchd an app that walks homeowners, contractors and architects through the home strengthening process.

FORTIFIED HomeTM On the Go can be downloaded free from the iTunes Store.

U.S. natural catastrophes accounted for almost one quarter of worldwide economic losses in the first half of 2016, and about 58 percent of global insured losses.

Lightning Strikes, Insurance Responds

Next time you’re home when a heavy thunderstorm rolls in, take a moment to think about how damaging lightning losses can be and how insurance helps.

In fact, insurers paid out $790 million in lightning claims last year to nearly 100,000 policyholders, according to a new analysis by the Insurance Information Institute (I.I.I.) and State Farm.

Damage caused by lightning, such as fire, is covered by standard homeowners policies and some policies provide coverage for power surges that are the direct result of a lightning strike.

As James Lynch, vice president of information services and chief actuary of the I.I.I. says:

“Not only does lightning result in deadly home fires, it can cause severe damage to appliances, electronics, computers and equipment, phone systems, electrical fixtures and the electrical foundation of a home.”

It’s due partly to the enormous increase in the number and value of consumer electronics that the average cost per claim has continued to rise, Lynch explains.

There were 99,423 insurer-paid lightning claims in 2015, down 0.4 percent from 2014, but the average lightning claim paid was 7.4 percent more than a year ago: $7,497 in 2015 vs. $7,400 a year earlier.

The average cost per claim rose 64 percent from 2010 to 2015. By comparison, the Consumer Price Index (an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation) rose by 9 percent in the same period.

In recognition of Lightning Safety Awareness Week (June 19-25), the I.I.I. and the Lightning Protection Institute (LPI) encourage homeowners to install a lightning protection system in their homes. These systems are designed to protect the structure of your home and provide a specified path to harness and safely ground the super-charged current of the lightning bolt.

The growing market for smart home technology makes installing a lightning protection system even more important, noted the I.I.I. It is also an opportunity for designers, builders and code officials to include lightning protection systems in their plans.

Kimberly Loehr, director of communications for the LPI adds:

“Just as smart homes provide the ultimate in safety and comfort, lightning protection systems ensure that state-of-the-art home automation systems aren’t damaged by direct or nearby lightning strikes.”

Industry Well-Prepared to Weather Hail Damage

Hail claims are making headlines following multiple springtime hailstorms in Texas, including one in the San Antonio region that is expected to be the largest hailstorm in Texas history.

While the estimated insured losses from the storms—$1.3 billion and climbing from two storms that hit the Dallas-Fort Worth region in March; as yet not estimated (but expected to be worse) insured losses from a third storm in the Dallas-Fort Worth region April 11; plus a further $1.36 billion early estimate of insured losses from the San Antonio storm April 12—may seem high, property insurers are well-prepared to handle such events.

In a new briefing, ratings agency A.M. Best says it expects limited rating actions to result as affected property/casualty insurers are expected to maintain sufficient overall risk-adjusted capitalization relative to their existing financial strength ratings.

Which insurers will be most affected?

A.M. Best explains that for property insurers, in particular in property lines of business, losses are expected to stem from broken windows and roof damage. This will have an impact on underwriting performance and overall earnings.

Companies with a heavy concentration of automobile physical damage will also have significant losses.

However, for property insurers the increased use of actual cash value (ACV) for roof repairs, increased deductibles, and improved risk management strategies will help limit the amount of the ultimate claim payment, A.M. Best explains.

The impact on most auto physical damage insurers is also expected to be mitigated given the generally large economies of scale of major writers in the market, A.M. Best adds.

Screen Shot 2016-04-26 at 10.35.12 AM

So, while the Texas hailstorm damage is poised to exceed the nine-year average of $1.2 billion for the United States, most insurers are well-capitalized and able to handle these severe weather events.

Nevertheless, as A.M. Best says:

“The volatile weather is a harsh reminder of the damages a property and casualty writer can be exposed to and the need for companies to continue to practice prudent and evolving risk management.”

Check out this review of research and testing related to hail damage by the Insurance Institute for Business & Home Safety.

The Insurance Information Institute also has some handy statistics on hail here.

U.S. Dominates March Catastrophe Claims

A reminder of the impact of severe thunderstorms is evident in March catastrophe estimates, with seven separate events across the country resulting in several billion dollars of insured losses.

Aon Benfield’s March Global Catastrophe Recap noted that overall economic losses sustained to property, infrastructure and agriculture across the U.S. from the convective storm and flood damage were anticipated to approach $3.5 billion.

Insured losses incurred by public and private insurance entities were tentatively estimated at $2.0 billion. (Presumably, that number includes estimated payouts by FEMA’s National Flood Insurance Program.)

More than 1,000 individual reports of tornadoes, damaging straight-line winds and hail were recorded by the Storm Prediction Centre, while torrential rains also led to significant riverine and flash flooding in the Lower Mississippi River Valley.

Among the hardest-hit states was Texas, Aon Benfield said, where events during consecutive weeks of greater than golf ball-sized hail in the greater Dallas-Fort Worth metro region led to more than 125,000 home and auto claim filings.

The Insurance Council of Texas has put preliminary estimated insured losses in the state at more than $1.1 billion alone.

Here’s the visual on March catastrophe losses in the U.S.:

UnitedStatesMarchCatastropheLosses

Artemis blog mentions that Impact Forecasting estimates for insured or reinsured losses in the U.S. in the first-quarter of 2016 from severe and winter weather now total $4.48 billion.

“Globally the figure is $5.82 billion, again demonstrating the importance of the U.S. property catastrophe insurance and reinsurance market.”

In its must-read facts and statistics on hail, the Insurance Information Institute notes that events involving wind, hail or flood accounted for $21.4 billion in insured catastrophe losses in 2014 dollars from 1994 to 2014 (not including payouts from the National Flood Insurance Program), according to Verisk’s Property Claim Services.

Information about how to reduce hail damage to businesses and homes is available from the Insurance Institute for Business and Home Safety website here and here.

Lightning Fatalities Prompt Warning

The number of lightning deaths in the United States in 2015 continues to rise, the National Weather Service (NWS) has warned.

So far this year some 22 lightning fatalities have been recorded, just four shy of the 26 deaths recorded for the whole of 2014.

Alabama, Florida and Colorado top the states for lightning deaths in 2015 to-date with three lightning deaths each.

Lightning kills an average of 49 people in the U.S. each year, and hundreds more are severely injured, according to the NWS.

M-F_Lightning_Deaths15

While storms can be deadly, the number of insurance claims from lighting strikes in the U.S. has been in a period of steady decline, according to the Insurance Information Institute (I.I.I.).

Total insured losses from lightning were up 9.7 percent in 2014, though overall incurred losses between 2010 and 2014 are still down 28.5 percent.

An analysis of homeowners insurance data by the I.I.I. and State Farm found there were 99,871 insurer-paid lightning claims in 2014, down 13 percent from 2013. Yet the average lightning paid-claim amount was up 26 percent, from $5,869 in 2013 to $7,400 in 2014.

James Lynch, chief actuary at the I.I.I. noted that since 2010, the number of paid lightning claims is down more than 53 percent:

The sustained decline in the number of claims may be attributed to an increased use of lightning protection systems, technological advances, better lightning protection and awareness of lightning safety–as well as to fewer storms.”

Still, lightning remains a very costly weather-related event. Despite fewer storms, insurers still paid $739 million in lightning claims to nearly 100,000 policyholders in 2014, the I.I.I. notes.

The Lightning Protection Institute offers some useful lightning safety tips here.

Hail Claims Add Up During April

We’re reading about the economic and insurance impact of severe thunderstorms in the United States in April 2015, as reported by Aon Benfield’s latest Global Catastrophe Recap report.

Five separate thunderstorm events in central and eastern parts of the U.S. caused expected insured losses of $2 billion, including more than $750 million from one event alone.

What was the $750 million event?

A widespread multi-day severe weather outbreak that hit central and eastern parts of the U.S. from April 7-10, leaving at least 3 dead and dozens injured.

Major damage was noted across the Plains, Midwest and the Mississippi Valley following 25 confirmed tornado touchdowns, grapefruit-sized hail, damaging straight-line winds, and flooding rains, according to Aon.

The April 9 EF4 tornado that devastated the communities of Fairdale and Rochelle, Illinois, is part of this event.

Total economic losses were estimated at $1 billion, while insurers put losses beyond $750 million.

Interestingly, Aon notes that much of the insured losses in this severe weather event were driven by claims resulting from hail.

The Insurance Information Institute (I.I.I.) has some useful facts and statistics on hail here.

It cites ISO figures that indicate events involving wind, hail or flood accounted for $16.1 billion in insured catastrophe losses in 2013 dollars from 1994 to 2013 (not including payouts from the National Flood Insurance Program).

The I.I.I. also notes that there were 5,536 major hail storms in 2014, per statistics culled from NOAA’s Severe Storm database. Nebraska had the largest number of severe hail events in 2014, followed by Texas, Kansas, Iowa and Missouri.

Over the 14 years from 2000 to 2013, U.S. insurers paid almost 9 million claims for hail losses, totaling more than $54 billion, according to a recent report by Verisk Insurance Solutions. That’s a hail of an impact.