In May, severe global weather left insurers with mixed data to mull over. While U.S. tornado activity for the month remained in the bottom 25th percentile dating back to the 1950s, major weather events still caused billions of dollars of damage domestically and around the world.
That’s according to Aon’s May 2014 Global Catastrophe Recap report. Specifically, the analysis comes from Impact Forecasting, the catastrophe modeling division of Aon Benfield, the reinsurance intermediary for Aon.
While U.S. tornado activity remained low in relative terms, severe storms and large hail caused $1 billion in damage in May in the Midwest, Plains, Rockies, Mid-Atlantic and Northeast. Even Chicago and Denver weren’t immune, and several billion dollars of economic losses are likely before the final damage tally comes in, Aon Benfield said. Heavy heat and extreme drought also led to wildfires through much of Southern California and the Texas Panhandle, killing two people and causing $100 million in damages.
Meanwhile, bad weather in May slammed much of the world. Southeast Europe faced its heaviest rains in 120 years in late May, causing $4.5 billion in damages, killing at least 80 people and causing extensive flooding in Serbia and Bosnia. Southern China also faced widespread flooding around the same time, with estimated economic losses of $1.2 billion and the deaths of at least 37 people, according to China Ministry of Civil Affairs data cited by Aon Benfield. There were also damage-causing earthquakes in China during the month. As well in May, Thailand faced a significant earthquake that killed at least one person, injured may others and caused millions of dollars in losses.
Brazil endured a major hailstorm that also included severe flooding, which temporarily displaced thousands.
Aon Benfield warned that non-tornado damage can still be costly and deadly. But it offered optimism, at least for the United States, where the property/casualty industry generally has its finances in order despite the non-tornado storms that surprised many in May.
“Large hail and damaging winds left considerable damage in many areas, which served as another reminder of how costly non-tornadic storm events can be for the insurance industry and local governments,” Steve Bowen, associate director and meteorologist within Aon Benfield’s Impact Forecasting team, said in a statement. “Despite the relatively low inactivity of the 2014 tornado season, insurers are still faced with several billions of dollars in storm-related damage claims. However, the industry remains well-positioned financially as the focus in the U.S. begins to shift towards the start of the Atlantic hurricane season.”