Joplin tornado could cost insurers as much as $2 billion, say regulators

Obama visits JoplinSeveral months have passed since a devastating tornado struck the city of Joplin, Missouri. The tornado was classified as an F-5, the highest classification of tornado, causing an unprecedented level of damage to the small city. The natural disaster struck a heavy blow against the insurance industry which has, to date, paid out more than $1 billion in claims. This number, however, is expected to double by the time insurers settle all outstanding claims, according to the Missouri Insurance Department.

The Joplin tornado was one of the worst natural disasters in recent history. The tornado came on the heels of a series of disastrous storms that ravaged much of the Southeastern U.S., adding to the financial toil provoked by these storms. In all, the tornado destroyed more than 8,000 homes and business in and around Joplin and claimed 160 lives.

Insurers have been battling against the effects of the tornado, hoping to make the recovery process as quick and painless as possible. Insurers have only recently gotten through with processing some 17,000 claims, which accounted for $1 billion in payments. Missouri insurance regulators say that this sum will increase as insurers continue to receive claims and make payments on these claims.

The U.S. insurance industry is reeling from two years of relentless natural disasters that have put the industry on shaky ground. Recovery has proven difficult, thus far, as both insurers and state agencies have had trouble allotting money to areas that are most in need.

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