Severe Convective Storms: Loss Trend Comparable to That of Hurricanes
Jeff Dunsavage, Senior Research Analyst, Triple-I (04/22/2022)
Severe convective storms are among the most common, most damaging natural catastrophes in the United States. In 2021, they resulted in the third-costliest year on record for the U.S. insurance industry, according to Aon, and catastrophe modeling firm RMS says the average annual insured loss from such storms nearly equals that from hurricanes, at around $17 billion.
The result of warm, moist air rising from the earth, they manifest in various ways, depending on atmospheric conditions – from drenching thunderstorms with lightning, to tornadoes, hail, or destructive straight-line winds. Population growth and economic development have contributed to increasing losses from such storms. At the same time, research suggests their geography, frequency, and intensity also may be changing.
Triple-I’s latest “State of the Risk” Issues Brief on severe convective storms looks at these trends and the complexity of predicting and pricing the risks related to such events. It also discusses what can be done to prepare for and mitigate the damage and how the insurance industry is responding.