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  • February 2014
02

US winter storms leave $1.5bn bill for insurers

Open-access content 7th February 2014

Winter storms that hit the US in January caused insured losses of $1.5bn, a global catastrophe report has found.

In its latest monthly report, Impact Forecasting - the catastrophe modelling arm of reinsurance firm Aon Benfield - said economic losses could be as much as $3bn following the extreme weather.

A series of powerful winter storms brought excessive snow and bitter cold Arctic air to much of the country in January. The most significant and costliest period occurred during the second week of the month, when at least 21 people died. The country also suffered from widespread property damage and severe travel delays, as temperatures plummeted to -30 degrees in central and eastern US - the lowest level in two decades.

Impact Forecasting's Global catastrophe recap noted that business interruption losses caused by the freezing weather were high because of severely delayed transport and closed commerce. This caused more than $200m in insured losses and $500m in economic damages. At least 33 people died as a consequence, the report stated.

Steve Bowen, senior scientist and meteorologist at the firm, said the current winter season in the US was already the costliest year since 2011.

'With higher-than-average snow totals, ice, and some of the coldest temperatures in nearly two decades affecting much of the country during January, the combination of physical damages and business interruption costs have quickly aggregated into direct economic losses well into the billions of dollars. The elevated losses this year are a reminder to insurers that the risks associated with the winter weather peril remain significant.'

The US was not the only part of the world experiencing severe weather in January, with winter conditions in Asia and South America causing torrential rains and widespread flood damage, with dozens of fatalities. China's Ministry of Civil Affairs reported that nearly $170m in economic damages had occurred to agricultural land and crops because of freezing temperatures.

An active windstorm season continued in Europe during January, with windstorms Anne and Christina each affecting western and northern sections of the continent. Economic damages in Ireland alone were estimated at around £405m.

New Zealand was struck by an earthquake, with a magnitude of 6.2, causing broken windows, cracked walls and collapsed chimneys. The New Zealand Earthquake Commission can expect payouts to reach the millions of New Zealand dollars, Impact Forecasting said. In addition, a combination of extreme heat and dry conditions in Australia sparked hundreds of bushfires, leaving at least two people dead. The Insurance Council of Australia expects payouts to top $13m. 

This article appeared in our February 2014 issue of The Actuary.
Click here to view this issue
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