Last week’s outbreak of devastating tornadoes in the South and Midwest of the U.S. are likely to cost the insurance industry quite a lot of money. Thus far, no insurer has been keen to release estimates regarding the total cost of the disasters, but risk modeling agency Eqecat is willing to hazard a guess. The acclaimed modeling firm says that this year’s storm season is already looking to be 30% more disastrous and costly than the average of previous years. The firm also notes that tornadoes may be one of the biggest risks faced by insurers this year and they could end up costing the industry more than $1 billion.
Last year proved that catastrophic storms were no longer the rarity they had once been. Insurers had expected that 2010 would have been an isolated incident in terms of natural disasters, but 2011 shattered that hope. Now, 2012 is looking to mimic the catastrophes of its predecessors, but with costlier results. Eqecat notes that last year’s tornadoes caused more than $26 billion in economic losses throughout the U.S. The firm says that it is likely that this year’s tornadoes could cause even more financial damage.
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As a whole, the insurance news concerning the industry is in a state of flux after last week’s storms. The total amount of the damage has not yet been tallied, but it is likely to be high, high enough to spur insurers into re-evaluating what risks they are willing to protect consumers against. Eqecat suggests that severe storms are likely to push insurers away from certain markets, which could leave consumers without protection during seasons that produce many destructive storms.