Kentucky tornadoes - an early view
A significant outbreak of convective storms and tornados struck a number of US states on the evening of 10thDecember and into the morning of 11th December. Damage was widespread and more than 50 people are reported to have died in the storms.
Although tornadoes can form at any time, they are more commonly a spring phenomenon that can impact across the US Midwest. December is traditionally a quiet month for storm formation. Despite this, one tornado is reported to have tracked across Arkansas, Kentucky, Missouri and Tennessee, a path 227 miles long and reported as the longest path ever. Kentucky appears to have been the most severely impacted state, with the town of Mayfield sustaining widespread destruction and loss of life. President Biden has declared a state of emergency in the state, ordering federal assistance to complement local emergency responders. Outside Kentucky, an Amazon warehouse in Edwardsville, Illinois was badly damaged. More than 150,000 homes were left without power across the region.
At the time of writing, we have not seen any formal estimates of market loss but the aggregate of losses across several states is likely to amount to a material sum for insurers and their reinsurers.
For comparison of a similar event, we are looking to a derecho (essentially an inland hurricane consisting of a series of fast moving thunderstorms) that caused devastation in the state of Iowa and beyond in 2020. 300,000 homes were left without power, with the aggregate insurance cost estimated at $7 billion by Sigma Research, part of Swiss Re. Argenta analysis shows that the derecho event added around 2 percentage points to the 2020 loss ratios of supported syndicates (about 1.5% of allocated capacity), with more than 97% of the loss allocated to the 2020 year of account in the proportion (the balance to 2019). Our early expectation would be a event of similar magnitude for syndicates’ 2021 year of account arising out the weekend’s losses.
Who to Contact
Andrew ColcombHead of Syndicate Research, APCLDirect line: +44 (0)20 7825 7176