Earliest estimates place US tornado insured loss near $3bn mark

The severe tornado storms that swept across as many as six US states are taking preliminary estimates upwards of $3 billion in insured damages.

Karen Clark & Company puts the figure at "around $3 billion" for privately insured residential, commercial and industrial properties plus automotive based on their proprietary SCS reference model.

ILS manager Plenum Investments wouldn't yet venture an estimate, but compared the devastation to a Spring 2011 tornado event focused on Joplin Missouri with an insured losses price tag of $2.8 billion.

ILS manager Twelve Capital gave a rougher "in the billions" estimate and warned that "impacts to ILS investors can also not (yet) safely be ruled out at this point" given the scarcity of early data.

A billion-dollar event would push the US 2021 nat cat totals to further record. The first nine months of 2021 had already brought 18 separate billion-dollar weather and climate events bearing disaster costs of $104.8 billion, already surpassing the disaster costs for all of 2020 ($100.2 billion, inflation-adjusted to 2021 dollars), according to the National Centers for Environmental Information (NCEI) of the US National Oceanic and Atmospheric Administration.

"We expect the losses to be concentrated in the commercial multi peril and homeowner lines, with some losses borne by auto physical damage as well," analysts at AM Best wrote in a note to clients.

The insurance industry in Kentucky, the US state suffering the greatest apparent damage, is well fragmented and "losses may be spread out among insurers," AM Best said. State Farm Group and Kentucky Farm Bureau Group top the market share charts for Kentucky at 19.6 percent and 18.2 percent respectively. Two others have between 5 and 10 percent shares.

Losses should remain focused, however, amongst primary carriers and the "growing frequency of tornadoes and such events will lead to insurers re-examining their reinsurance protection," AM Best said.

The US federal disaster relief agency FEMA announced already Monday that federal disaster assistance has been made available to Kentucky to supplement state and local recovery efforts.

In the events, some 60 reports of tornadoes and over 350 reports of damaging wind gusts accumulated, Karen Clark & Co noted in its report.  Most of the damage was caused by the “Quad-State Tornado” which impacted four states over four hours along a path exceeding 200 miles in length.

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