Loss Trends for Severe Convective Storms

Loss trends for severe convective storms (SCS) have increased over the past 15 years and even more during the past five years, according to Dan Dick, global head of Catastrophe Management at Aon.

“What’s interesting about these trends is when you start to tease out what’s driving the increase in claims, you realize that overall frequency has not changed that dramatically. It’s not as if we’re getting more events,” he said.

He explained that about 80% of that increase is coming from exposure growth as geographic areas become more concentrated with buildings and populations and as values rise significantly.

U.S. hurricanes over the last 30 years through year-end 2022 have cost insurers approximately $555 billion (trended to 2023 dollars). “If I calculate just severe convective storms, which includes tornadoes, hailstorms and straight-line wind events, the trended loss over the same period through the first half of 2023 cost insurers $526 billion,” Dick continued.

“The valuation trend and the concentration trend has jumped dramatically over the last 10-15 years, which is driving up some of these losses.” These trends, he said, have not necessarily been captured in the models, which often look at a 30-year trended average and do not look at the last five to 10 years — just because of what goes into adjusting a model and keeping a model current.

This article first was published in Insurance Journal’s sister publication, Carrier Management.

Topics Trends Profit Loss Windstorm

Was this article valuable?