Billions in losses expected from SCS activity and Houston derecho this week: Aon

This week, severe weather in parts of the United States, consisting of thunderstorms, hail, convective storms, tornadoes and a derecho event that struck Houston, Texas, is expected to result in losses of several billion for the insurance and perhaps reinsurance market.

Brokerage Aon said today the final total would reach into the billions following continued Severe Convective Storms (SCS) across the United States this week.

Meanwhile, reinsurance broker Gallagher Re said earlier in the week that the May 16 derecho event in Houston, Texas, alone is expected to cause more than $1 billion in losses to the insurance market .

Aon’s Impact Forecasting division said today: “During the period between May 16 and 22, a series of severe convective storm systems hit the southern and eastern United States.

“There have been two main series of events, which have caused significant economic and insurance damage, expected to reach billions of US dollars.

“The derecho system that crossed the Gulf Coast from central Texas to central Florida was particularly notable and resulted in significant wind-related damage.”

The derecho event in Houston had a particularly large impact, but during the remainder of the week, severe convective storms (SCS) moved eastward and other major tornado impacts were observed, in areas ranging from Kansas to Nebraska and Iowa.

Aon’s Impact Forecasting report further stated: “Recent outbreaks have resulted in significant damage from a mix of hazards, including high winds, tornadoes, large hail and heavy rain. Probably the most costly individual system was the derecho that affected population centers along the Gulf Coast.

“While damage assessments and filing of claims continue, it is too early to provide a definitive estimate of possible financial impacts.

“However, given the extent of the damage and the exhibition centers affected by the event, it is very likely that the event will result in losses in the billions of dollars.

“Notable additional impacts were caused by thunderstorm activity throughout the period May 16-22.”

Tornado reports are now well above average so far this year and inflation-adjusted tornado reports are above the 75th percentile so far.

Hail reports are also near trend, while strong wind reports are now well above the trend line.