U.S. May storm losses could be higher than expected

If Missouri’s Insurance Department (MDI) is correct, insured losses from tornadoes and storms that struck several states in early May. In Missouri alone, insurers can expect to pay out US$500 million or more, says the department’s director, Scott Lakin.
The Insurance Services Office (ISO) had predicted a $1.55 billion price tag for the storms, but this was with Texas expected to be the hardest hit at US$310 million in losses. At the time, Missouri was expected to have US$275 million in insured losses. Originally, it was thought the storms, which hit 18 states between May 2-15, might top the largest storm losses ever. AIR Worldwide Corp. suggested losses could exceed the existing benchmark of $2.2 billion.
A survey of just 32 insurers in the hardest hit areas of Missouri shows they had projected losses of US$400 million at the end of May. The US$500 million estimate includes this projection plus 100 smaller insurers who have not yet reported losses, and 120 mutuals.
Over 75,000 residents in Missouri will file claims, MDI predicts. “In most areas of the state, insurers reported that claims were divided equally – for every home destroyed or damaged, an auto had been hit,” MDI reports.
Lakin used the storm as a chance to encourage business owners to get adequate business interruption coverage. “Many businesses will survive only because they had this kind of coverage, which is part of the standard business owners package,” Lakin says. “It is not enough to insure just the building, equipment and inventory a business owns.”