Canadian Underwriter

U.S. severe weather, flooding leads to billion-dollar cost for insurance industry in January: Aon Benfield

February 9, 2017   by Canadian Underwriter

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Major severe weather and flood events in the United States in January led to billion-dollar cost for the insurance industry, according to Aon Benfield’s latest Global Catastrophe Recap.

A Georgia state trooper walks past a mobile home destroyed by a possible tornado in Adel, Ga. Residents in Georgia, Mississippi and South Carolina are trying to pick up the pieces left behind by a powerful storm system that tore across the Deep South over the weekend, killing 19 people, including 15 in south Georgia. (AP Photo/Brendan Farrington)

The January report noted that separate major severe weather outbreaks swept across the U.S. last month, killing a total of 27 people. The most prolific event occurred during the second half of the month, after nearly 80 confirmed tornadoes – including three rated EF3 – touched down in the southeast portion of the country.

“Among the hardest-hit states were Georgia, Mississippi, Alabama, Louisiana and Florida as thousands of homes, businesses and other structures were damaged or destroyed,” the report said. “States of emergency were declared in Mississippi and Georgia.”

Total combined economic losses from the events (January 1-3 and 18-23) were expected to exceed US$1 billion, with the insured portion minimally in the hundreds of millions in U.S. dollars, the report said.

The report added that the National Weather Service preliminarily confirmed that at least 130 tornadoes touched down in January – the highest number in the month since 1999 (212). In addition, consecutive winter storms brought extreme precipitation across the western portion of the U.S. The most significant damage was noted in California due to flash flooding, mudslides and debris flows. Total economic losses from the early January event were expected to approach US$700 million; public and private insurance losses were listed at approximately US$300 million.

In Canada, the report noted, a dangerous ice storm impacted portions of Atlantic Canada from Jan. 24-27, leading to the deaths of two people. Dozens of others were hospitalized. The storm system led to significant accumulations of freezing rain, ice and snow to portions of Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. At the peak of the event, as many as 133,000 NB Power customers were without electricity. “Total economic was expected well into the tens of millions (USD).”

Other events around the globe in January:

  • The “worst wildfires in Chile’s modern history” left at least 11 people dead. An estimated 2,500 structures and vehicles were damaged or destroyed by the fire, including reports that more than 1,000 alone were destroyed in the town of Santa Olga. The fires consumed at least 452,000 hectares of land nationwide. Preliminary damage and firefighting costs were listed at a combined US$890 million;
  • Exceptional rainfall in southern Thailand left at least 96 people dead in January. As many as 585,000 homes and other structures were inundated. Much of the commercial loss was centred on the rubber industry (Thai production is one the biggest for the sector in the world). Total economic losses were estimated to reach or exceed US$860 million;
  • Severe flooding was registered in Malaysia. More than 25,000 people were evacuated in Terengganu and Kelantan states after widespread damage was noted. The government cited combined economic losses of US$132 million;
  • A stretch of bitterly cold Arctic air engulfed much of Europe during the first half of January. As least 76 people were killed as a result of exposure or in weather-related accidents. Windstorm Egon came ashore and caused an insured loss estimated as high as US$170 million in France and Germany; and
  • A series of moderate earthquakes rattled central Italy on Jan. 18, spawning damage and avalanches that led to at least 30 casualties.

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