2014 insurance losses from U.S. winter storms likely to reach $2.5 billion

The Insurance Information Institute (I.I.I.) is cautioning that last week’s arctic cold surge and heavy snow accumulations in large parts of the United States could signal a repeat of this past winter’s deep freeze and set the stage for potential hazards for homeowners and drivers.

A repeat of this past winter’s deep freeze is possible, III notes in a statement Monday, adding that the cold, ice and snow translates into frozen pipes, collapsed roofs, auto accidents and slip-and-fall injuries.

“Losses from snow, ice, freezing and related causes averaged US$1.2 billion annually over the past 20 years,” Robert Hartwig, III president and an economist, says in the statement from the institute, a non-profit communications organization supported by the insurance industry.

“This year, insured losses from severe winter events will be at least double that amount, likely exceeding US$2.5 billion by year’s end, making 2014 the fourth costliest year on record for winter storm losses,” Hartwig points out.

Winter storm claims – at 6.4% of all insured catastrophe losses between 1994 and 2013 in the U.S. – follows hurricanes (41%) and tornadoes (36%) as the third-largest cause of insured catastrophe losses, he reports.

In 2013, the winter losses totalled US$1.8 billion, but 2014 has been worse. Even before this month’s cold and snow once hit much of the U.S., Munich Re had reported there were 11 winter storms and cold waves in the January through March period, resulting in an estimated US$2.4 billion in insured losses, the III statement adds.

Munich Re further reports that in the first quarter of 2014, the Eastern U.S. experienced its coldest winter in more than a decade, and Weather Bell models reports that the U.S. as a whole is experiencing its coldest November since 1976.

With regard to auto claims, the Property Claims Service for Verisk Insurance Solutions notes that 42 states saw auto insurance claims rise in 2014 Q1 compared to the same period in 2013. As well, countrywide claim frequency rose 8.5% from a year earlier.