US Severe Convective Storm insured losses $25bn+ YTD: Gallagher Re’s Bowen

As the United States continued to experience outbreaks of severe convective storms (SCS), large hail and some tornadoes in recent days, Steve Bowen, Chief Science Officer at reinsurance broker Gallagher Re said the total cost to the insurance industry from this peril has likely surpassed $25 billion year-to-date.

According to Bowen, severe convective storm insured losses for the first-half of 2023 are already likely to be in the top-three H1’s ever recorded, underscoring the severity of this year’s convective weather and related perils.

For the first-quarter of 2023, the severe convective storm (SCS) peril was seen as the largest contributor to global insurance and reinsurance market losses from catastrophe events, according to Gallagher Re.

Q1 2023 saw more than $10 billion of convective storm insured losses, as so-called secondary perils once again made up the bulk of the quarterly loss burden.

The second-quarter saw severe weather events continues across the United States, with outbreaks through April and May driving a heavy burden for some insurance carriers.

A prime example of the effects of severe and convective weather events through the second-quarter, is Allstate’s disclosures of particularly high catastrophe losses, with now almost $1.8 billion reported for April and May, which as we said are the first two months of the aggregate risk period for its Sanders catastrophe bonds.

A recent stretch of severe convective weather across the US, from June 10th through 19th 2023 has increased the tally for the year.

Catastrophe modeller Karen Clark & Company (KCC) recently said that period will contribute around $5.5 billion in insurance and reinsurance market losses from convective storm activity.

Bowen of Gallagher Re explained that including some of that activity, he now expects that year-to-date US severe convective storm losses will have surpassed $25 billion, with hail driving a major portion of the loss.

Full-year 2022 saw Gallagher Re estimate that convective storm related losses globally had reached $39 billion, the eighth year since 2010 where they have topped $20 billion.

2023 is already the ninth year to top $20 billion in SCS insured losses, in that case.

At this stage, 2023 could also be running ahead of 2022, for US convective storm insured losses, as they had only been cited as close to reaching $20 billion around this time a year ago, making this year a more impactful one for the insurance and reinsurance industry so far.