Oklahoma won’t move the market or change assumptions
According to AIR Worldwide, the tornado that ripped through Moore, Oklahoma earlier this week caused an estimated $6 billion of damage, including a one-mile buffer zone outside of the storm’s track in calculations. Despite the damage, a spokesperson for the Property Claims Service at Verisk Analytics says the single event on its own will not move the re/insurance market and presents no learning points.
The tornado, which struck May 20th, was rated EF-5 by the national Weather Service. The storm itself is thought to have been over a mile wide with wind speeds over 200 miles per hour. It destroyed homes, businesses, a hospital and two elementary schools and caused several casualties, although the number of fatalities is now considered lower than was thought in the immediate aftermath of the event. The AIR report reads: “according to reports and aerial images, property damage in the affected region is extensive, with whole neighbourhoods heavily damaged or destroyed.” There is no official tally of the damages, but the last comparable storm destroyed 8,000 homes.
According to Dr. Tim Doggett, senior principal scientist at AIR, the storms were caused by an upper level low pressure system meeting warm, humid air ahead of a cold front and wind sheer. The system has caused 22 tornadoes this year. Doggett said: “the tornadoes spawned by these supercell events are long-lived due to the orientation of the track and the severity of the conditions, leaving behind long and wide swaths of damage.”
A spokesperson for the PCS team at Verisk said: “events like this do not occur often, but they do become part of the overall response plan for insurers and reinsurers. In 2011 the tornado damage in Birmingham, Alabama and Joplin, Missouri were also unexpected and yet another reminder of how significant insured losses can be as a result of severe weather. Nevertheless, the industry responded and did what it is supposed to do.”
The spokesperson continued: “there are not many lessons from this event that will bring new knowledge to insurers. Catastrophes are an important reason that insures are in the businesses of providing coverage. No one likes to see this kind of destruction, but such unfortunate events do occur. However, this does not mean that such unfortunate events are surprises. In Moore, Oklahoma, as in other areas, most residents are aware of the risks. Following the tornado damage in 1999, some residents installed tornado shelters when rebuilding their homes, and timely warnings from officals in the area also gave residents time to take shelter. Beyond such measures, not much more can be done to mitigate or resist the direct damage of a tornado. In this case too, not much else could have been done to save buildings from the onslaught of this monster tornado.”
AIR’s report reads: “damage assessments from the National Weather Service are ongoing, and it will take weeks to develop a more complete picture of the destruction.” According to the PCS team at Verisk, an estimate of insured property damage will be issued in early to mid-June.
