Springtime hailstorms in the Dallas-Fort Worth region of Texas are adding up to some significant insured losses that could exceed the 9-year average, according to the latest A.M. Best briefing.
Two severe hailstorms in March have cost $1.3 billion already and the final tab is rising as estimate pour in. At issue now is a third major hail storm that struck the same region on April 11.
According to A.M. Best, “this third storm is expected to be worse than the first two.” What’s more, weather patterns this spring continue to be unstable and volatile, contributing to hailstorm-friendly conditions that won’t likely end for some time.
“Over the last month, Texas has seen an unusual amount of moist air and instability over the state, keeping the hail suspended in the clouds over an extended period of time, resulting in baseball-sized hail that created significant damage,” A.M. Best said in its briefing. “Volatile conditions ripe for producing hail picked up steam in March and are expected to remain in place until at least June.”
A.M. Best said U.S. hail damage in 2015 hit about $1.2 billion, which was below the 9-year average. So far in 2016, Texas hail damage alone – at $1.3 billion – has already met the 9-year average or the U.S, according to National Weather Service Data cited by A.M. Best. Also, Texas accounted for 30 percent of all hail reports since 2016 began.
That means the final tab could be quite costly to property/casualty insurers who do business in the state. Top Texas writers include State Farm Group, Allstate Insurance Group, Farmers Insurance Group, USAA and Liberty Mutual Insurance Companies, A.M. Best noted.
Recently, Travelers reported a lower-than-expected Q1 profit due to $318 million in pre-tax catastrophe losses, stemming largely from Texas hailstorms in March. Allstate also blamed Texas hailstorms for two-thirds of its pretax catastrophe losses during the quarter – coming in at $827 million.
A.M. Best noted that property insurance losses are expected to stem from broken windows and roof damage. However, the there is a potential bright spot because greater use of actual cash value (ACV) for roof repairs, increased deductibles, and improved risk management strategies over the last several years will limite the ultimate claims payment amount, according to the ratings entity.
Source: A.M. Best