Could this year's hyperactive tornado season turn out to be the worst on record?  July 22nd 2024

Could this year's hyperactive tornado season turn out to be the worst on record?

The United States is way ahead of normal this year for tornadoes, but could the year end up being the worst ever?

Severe weather has been a frequent occurrence across the United States this year, with an unusually high number of tornadoes, which has propelled 2024 toward the top of the list of the most active tornado years on record.

“This has been an incredibly active year for tornadoes in the United States,” said AccuWeather Lead Long-Range Expert Paul Pastelok.

As of July 17, there had been 1,421 tornado reports in the United States, well ahead of the 2010-2024 historical average of 1,001, according to the Storm Prediction Center. In fact, 2024 has already had more tornadoes than the average annual total of 1,402.

Tornado outbreaks at the end of April and the month of May quickly raised 2024 above the historical average. Since then, a steady stream of tornadoes, including dozens during Hurricane Beryl, has increased that number even more.

Q2 storm losses could portend 'bad year' for US P&C insurers

Heavy weather losses stand to be the focal point for investors and analysts when US property and casualty insurers release second-quarter financial results

After enjoying a respite from severe weather in the two previous three-month periods, the second quarter was dominated by a series of severe convective storms and tornado outbreaks that stuck large swaths of the country from Texas to the Northeast. Large losses from those storms, coupled with the historic early appearance of powerful Hurricane Beryl have raised some red flags for insurers, Keefe Bruyette and Woods analyst Meyer Shields said.

"I think fear is the predominant emotion in [the property and casualty segment] of the industry," Shields said in an interview. "[Beryl] certainly reinforces people's concerns that this could be a bad year. We don't know if it will be a bad year in terms of insured losses, but there's reason to be nervous."

An S&P Global Market Intelligence analysis found that sell-side analysts expect combined ratios to rise year over year at 10 of 19 of the largest publicly traded US property and casualty (P&C) and multiline insurers. Nearly all of them are expected to see their combined ratios climb sequentially.

There were nine weather events in the second quarter that generated at least $1 billion in inflation-adjusted economic losses, according to NOAA's National Centers for Environmental Information. Those events were responsible for 39 deaths and cost a total of $23 billion. Added to the six such events in the January–March period, there were 15 billion-dollar events in the first half of 2024 that led to 106 deaths and $37.9 billion in costs.

Six insurers are projected to record combed ratios in excess of 100% in the quarter, signifying underwriting losses. Horace Mann Educators Corp. is expected to have the highest at 114.7%, followed by The Allstate Corp. at 108.1%, The Hanover Insurance Group Inc. and Cincinnati Financial Corp. at 101.1%, and The Travelers Cos. Inc. and Assurant Inc. at 100.7% each.

Monthly reports from Allstate and The Progressive Corp. show how the weather has affected their bottom line. Allstate reported catastrophe losses of $494 million and $1.48 billion in April and May, respectively. BMO Capital Markets estimated the company's catastrophe losses for the quarter at $2.65 billion, compared to nearly $2.70 billion in the same period in 2023.

Verisk estimates US insured losses from Beryl to range between $2-3bn

Verisk’s Extreme Event Solutions group has estimated that industry insured losses to onshore property from wind in the US for Hurricane Beryl will range between $2 billion and $3 billion.

For those who need refreshing, Beryl began as a tropical depression over the central tropical Atlantic on June 28, organising into a tropical storm just a few hours later and rapidly intensifying over the next two days.

On July 1, Beryl passed through the Windward Islands as a Category 4 hurricane and would go on to become a Category 5 hurricane later that day, the earliest on record in the Atlantic.

The storm made three separate landfalls: Carriacou Island, Grenada on July 1; Tulum, Mexico on July 5; and finally Matagorda, Texas on July 8.

As Verisk notes, Beryl’s imperfect structure played a role in the storm, only strengthening to a fledgling Category 1 hurricane before making landfall near Matagorda Bay, Texas.

“Widespread and prolonged power outages in Texas are likely to be a legacy of Beryl’s arrival in the state,” Verisk said.

Swiss Re rethinks its wildfire underwriting approach with latest technology

Wildfires are an escalating threat, consistently surpassing historical records. Since 2000, they have consumed 7 million acres annually, double the yearly acreage burned in the 1990s, according to Swiss Re.

According to a report from the reinsurer, this trend shows little sign of abating. In 2023, wildfires in Hawaii led to the largest insured loss from any natural catastrophe event ever seen in the state, in a region previously considered to have low catastrophe risk.

The Smokehouse Creek fire, burning more than 1.2 million acres, was the largest ever in Texas. These events underscore the urgent need for proactive measures to mitigate these risks.

Swiss Re, in collaboration with Bellwether, announced that it is using AI and comprehensive data harvesting to enhance underwriting capabilities for insurers facing wildfire risk.

Bellwether’s technology harnesses 600 layers of geodata from sources like Google, including detailed information on canopy, vegetation, precipitation, and wind speed. These datasets train machine learning models to forecast wildfire risk in specific areas accurately.