Tornadoes in U.S. Midwest could become insurance industry’s first billion-dollar severe weather event in November

The tornado outbreak that tore through the United States Midwest Nov. 17-18, reducing some areas to rubble, will likely rank as one of the top five most significant November outbreaks since 1950 and could become the country’s first billion-dollar severe weather event in November, notes a storm report issued Tuesday by catastrophe modelling firm RMS.

Although damage estimates are far from final, there is a good chance the “outbreak will become the insurance industry’s first billion-dollar severe weather event to occur in November,” suggests Matthew Nielsen, a meteorologist and director of model product management at RMS.

RMS notes that the significant outbreak of late-season severe thunderstorms rapidly moved across the U.S. Midwest and brought with them hail, strong winds and tornadoes to several states.

Two factors drove the magnitude and severity of the outbreak: unseasonably strong thermodynamic instability and unusually strong wind shear throughout the depth of the atmosphere, Nielsen explains.

As of early morning on Nov. 18, RMS cites the National Weather Service as reporting there had been 81 preliminary tornado reports – most of these originating in Illinois and Indiana – and almost 500 high-wind reports, 17 of which were hurricane strength. There were reported to be six deaths, dozens of injuries and widespread damage.

RMS adds that there have been confirmed tornado touchdowns in counties in Illinois, Indiana, Kentucky, Missouri and Wisconsin. One of the hardest hit areas – New Minden, Illinois, east of St. Louis – was struck by a tornado preliminarily rated as an EF-4, which resulted in a damage path three miles long.

The Insurance Information Institute (III) notes an EF-4 rating on the Enhanced Fujita Scale means the tornado has winds of at least 166 mph.

“The tornado was one of only 20 EF-4 tornadoes to occur in November since 1950, and the third most northerly November EF-4 ever observed,” notes the RMS report, citing information from the Tornado History Project.

In Illinois, RMS states that “tornadoes and powerful thunderstorms have flattened entire neighborhoods, uprooted trees and damaged power lines.” Official numbers of damaged buildings in the wake of the outbreak are not yet available, and the full extent of damage in some areas has not yet been assessed.

“Sunday’s big tornado outbreak is yet another atypical storm of what has been an unusual 2013 severe weather season,” Nielsen says. He points out that prior to the event, only 818 tornadoes had been confirmed in 2013.

This represents the lowest year-to-date count since 1988. The top three tornado outbreaks in terms of numbers have occurred in November, 81 (preliminary reports); January, 62; and October, 42.

Despite the relatively low numbers of confirmed tornadoes, RMS adds that “the events that have occurred have been particularly damaging.”

Citing the October 2013 Global Catastrophe Recap from Aon Benfield, the report notes there have been five severe-weather outbreaks that have caused at least $1 billion in damages in 2013.

RMS reports the most expensive and deadliest tornado outbreak thus far in the U.S. has been the May 18-22 event, driven mostly by the EF-5 tornado that devastated Moore, Oklahoma.

III reports that insured losses for this event are estimated at almost $1.6 billion.

From a frequency perspective, the RMS report notes that late-season outbreaks are not uncommon, but they are much more infrequent than spring/summer outbreaks. Since 1950, approximately 35 tornadoes per month have occurred in November, compared to almost 200 per month in May.

“What was unique about Sunday’s event was how far north the severe weather extended. Severe thunderstorm and tornado warnings stretched into parts of Wisconsin and Michigan, highlighting the importance of capturing these types of events from a catastrophe modelling perspective, even if historical records don’t,” the RMS report adds.

The III cites figures from Munich Re, which note that severe U.S. thunderstorms, including tornado events, cost US$14.9 billion in insured losses and $US27.7 billion in economic losses in 2012.

Looking at historical records, the costliest U.S. catastrophe involving tornadoes hit Tuscaloosa, Alabama and other areas in April 2011, causing US$7.4 billion in insured losses (in 2012 dollars). This was followed by the second costliest tornado, which occurred in Joplin, Missouri and other locations in May 2011, and resulted in $7.0 billion in insured losses (in 2012 dollars).

“While it is too early to tell what the losses from Sunday’s severe weather will be, hundreds of homes, businesses and vehicles were damaged or destroyed,” notes the III statement.