If the first quarter is any indicator of likely tornado activity for 2008, insurers may be headed again this year for another long season of increased claims activity and high catastrophe losses.The number of tornadoes in first quarter 2008 surpassed the previous four year average, but an even more troubling trend for the industry has emerged: Losses of $1 billion and higher from single events are becoming more frequent, approaching losses from hurricanes. A.M. Best Co.’s U.S. tornado catastrophe review also found that:
- Already in 2008, insured losses from severe weather systems have surpassed $1 billion—about $850 million stemming from the Super Tuesday Tornado Outbreak in the mid-South on Feb. 5 and Feb. 6. Early damage estimates from a March 14 tornado that struck in downtown Atlanta and surrounding counties are at $340 million.
- While hurricanes and earthquakes, on average, tend to generate higher losses per event, tornadoes and related weather events have caused nearly 57%, on average, of all U.S. insured catastrophe losses in any given year since 1953. In 2007, losses from these perils generated 69% of total insured catastrophe losses.
- Smaller insurers, particularly single-state writers with exposure concentrated in tornado prone states, are facing increasing pressure on profitability from several years of high back-to-back losses.
- For policyholders in tornado-prone regions, this may mean increased premiums and deductibles, and coverage interruptions.
BestWeek subscribers can download a PDF copy of all full special reports at no additional cost or a combination of the PDF copies plus all related spreadsheet files of the report data at no additional cost from our Web site at www.bestweek.com.
Nonsubscribers can download a PDF copy of the full special report (16 pages) for $55 or a combination of the PDF copy plus the spreadsheet file of the report data for $140 from our Web site at www.bestweek.com. Call customer service for more information, (908) 439-2200, ext. 5742.
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