Insurance companies may pay out over $2 billion from U.S. weather damages

federal flood insurance program stop

The United States has been facing some extreme weather and the last 10 days of December led to significant losses.

The extreme weather seen throughout many parts of the United States last month, particularly during the last ten days, has led to some significant losses for insurance companies, with estimates suggesting that payouts could top $2 billion.

This estimate was made by Aon Benfield, the reinsurance broker, which recently announced its predictions.

The flooding, tornadoes, hail, snow and winds throughout the last ten days of December led to the deaths of at least 64 people in the U.S. This was pointed out in the global catastrophe report issued this month by Aon Benfield. It also shared its estimate that natural disasters in the United States will have brought about economic losses worth over $4 billion when taking the entire month of December into account. That said, insurance companies are continuing to brace for more as it doesn’t appear as though the weather is finished, for the moment.

Insurance companies are especially focused on the ongoing flooding as well as floods that are expected at any moment.

flood insurance stopThe potentially catastrophic situation in Tennessee is leading to serious tensions as the Mississippi River continues to rise, threatening residents and businesses in the area. Still, in the report from Aon Benfield, the reinsurance broker has indicated that the flooding damages that could occur in that situation may not be exceptionally high for insurers.

The reason is that while this is an ongoing event, the region doesn’t have a great deal of coverage, which means that it won’t likely be insurers that are hardest hit. Report author Steve Bowen explained that “The event is ongoing, but given under-insurance or a lack of any … flood insurance across some of the hardest-hit areas in Missouri and Illinois, much of the flood loss is not expected to be covered by insurance.”

Still, there remains an entire winter season that has yet to truly show what it has in store for insurance companies. Though this could be mild in terms of temperatures, what has yet to be known is what will occur when it comes to precipitation and wind storms.

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