Insurance companies must reconsider the handling of tornado policies

Joplin TornadoThe tornado season is already off to a destructive and deadly start this year, leading insurance companies  are taking another look at the way that they handle and underwrite for the areas in the United States that have the highest risk of these devastating and recurring events.

What this may mean, is that homeowners could discover that they are paying rates that are significantly higher than they have in the past, or that they may not be able to find any coverage at all, as insurance companies work to reduce their exposure to an increasing problem.

Last year alone, the American insurance industry saw losses worth almost $26 billion due to tornadoes and related storms. These losses were higher than those seen in any other year. This year, insurers have already seen tornado-related losses of as much as $2 billion.

Though this total is still about half as much as the losses from Hurricane Katrina in 2005, as the tornado season continues to be at its peak right through July, and the majority of the losses from tornadoes occurred in April and May last year, it could mean that there is still a great deal more to lose over the next.

According to the data from Eqecat, the disaster modeler, the number of tornadoes that have been recorded so far this year have reached two times higher than the seven year average number. Equecat’s estimations places the losses from the string of tornadoes last week at between $1billion and $2 billion.

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