Market braces for tropical cyclone season following May’s extreme weather

11-06-2021

US insurers face a multi-billion-dollar payout following extensive hail, tornado, wind and flood damage in a series of extreme weather events in May. 

That is according to Aon’s latest monthly Global Catastrophe Recap report, which evaluates the impact of natural disaster events worldwide during May 2021. 

A severe storm that swept across the Plains, Lower and Middle Mississippi Valley, Southeast and Mid-Atlantic sections of the US from May 3-5 caused combined economic losses that are expected to exceed $850 million. Most of the hail and wind-related damage was insured, Aon noted. 

From May 6-11 a series of frontal systems resulted in widespread severe weather across parts of the Plains, Middle and Lower Mississippi Valley and Southeast, with large hail, damaging straight-line winds, tornadoes and flooding causing expected losses of $350 million.

On May 17, flash flood emergencies were issued for localities in southeastern Texas and southern Louisiana, while severe storms generated hail, strong straight-line winds and brief tornadoes. Total economic losses from the severe weather and flooding were estimated at $1.1 billion, but a large portion of the flood-related damage in Louisiana is likely to be uninsured, Aon warned. 

Meanwhile, India was hit by two tropical cyclones in May. Tauktae made landfall in the state of Gujarat on May 17, resulting in at least 198 fatalities in India and Sri Lanka, and an estimated economic cost of $1.5 billion. Cyclone Yaas made landfall on May 26, causing at least 19 fatalities and causing damage to more than 325,000 homes. Economic losses were estimated at $2.7 billion in West Bengal alone. 

Michal Lörinc, senior catastrophe analyst for Aon’s impact forecasting team, said: “Natural catastrophes continued to bring notable impacts to areas around the world in May, which is often the start of a transition towards tropical cyclone season in the Northern Hemisphere. While most focus is on the Atlantic Ocean, the most activity last month was found in the North Indian Ocean as two cyclones struck the east and west coasts of India in a matter of days. Proper planning and evacuations helped minimize the level of casualties, which once again highlights the importance of early warning systems. Such warnings also offer an opportunity to collaborate with the private sector to use tools that help further identify highly vulnerable locations.”

Aon, Michal Lörinc

Bermuda Re