March on-track to beat record for tornadoes, losses mounting: Aon
March 2022 is on-track to beat the record for the most tornadoes to be recorded in that month, while the most recent severe convective storm and tornado outbreak from this week will add hundreds of millions of dollars to insurance market losses, according to Aon.
Earlier this week Artemis explained that another dangerous severe storm and convective weather outbreak was expected for southern states of the US, with torrential rain, large hail, damaging winds and some tornadoes.
That forecast verified, with severe convective storms forming across a swathe of the southern United States and more property damage experienced, raising the first-quarter toll for insurance and reinsurance markets.
This weeks convective weather impacted the US from March 29th through 31st, with Aon’s Impact Forecasting reporting that there were dozens of tornado touchdowns, as well as damaging straight-line winds, hail, and isolated instances of flash flooding.
“The most significant weather occurred on March 30 with damage cited from Arkansas to Alabama, including many areas still recovering from a major severe weather outbreak only one week prior. Early assessments cited the strongest tornado in Washington County, Arkansas, where an EF3 twister left notable impacts in multiple communities,” Aon’s catastrophe modelling and meteorology unit explained.
Aon said that this most recent stretch of severe convective weather is anticipated to drive economic as well as insurance and reinsurance market losses in the hundreds of millions of dollars.
Aon also highlights what the industry may see as a disturbing trend in US severe thunderstorms and severe convective weather this year.
“2022 is on track to set a record for most tornadoes recorded during the month of March in the United States,” Aon’s Impact Forecasting explained. “As of this writing on March 31, there have been at least 222 preliminary reports of tornadoes during the month. If this is confirmed by the Storm Prediction Center, this would be the first time that March had surpassed the 200-tornado threshold.”
The company also added, “There has been a notable increase in March tornadoes in recent years. This can be attributed to more frequent occurrences of La Niña. The tie to climate change remains too early to confidently cite any direct link, though an earlier start to severe weather season – February or March – is plausible as the atmosphere and oceans continue to warm.”
So far in 2022, US tornado counts are running above average and on an inflation-adjusted basis are running above the 75th percentile.
Severe convective weather, severe thunderstorms, large hail, damaging winds and tornadoes are all aggregate drivers of a relatively significant amount of losses for the US insurance and global reinsurance industry every year.
In addition, these events tend to have an aggregate deductible erosion effect on some catastrophe bonds, as well as other insurance-linked securities (ILS) transactions, meaning they are very relevant for ILS funds and investors.
With La Niña conditions expected through the coming weeks, which are often some of the most active for severe storms and convective weather, the industry will keep its eye on US weather developments and hope any outbreaks are largely in less built-up areas of the country.