Willis Re report claims US thunderstorm property risk as high as hurricane risk

According to a new report from Willis Re the risk to US property from thunderstorms is as high as from hurricanes.

The report is entitled Managing Severe Thunderstorm Risk, and was put together with Columbia University, a Willis Research Network (WRN) partner.

It claims that the average annual loss from severe convective storms (SCS) was $11.23 billion, compared with $11.28 billion from hurricanes for the period 2003 – 2015. Over the past ten years, SCS was the largest annual aggregated risk peril to the US insurance industry.

In addition the report also points out that SCS frequency in the US is higher following La Niña, and lower following El Niño.

"Regional variability in increased or reduced severe convective storm frequency due to the El Niño-Southern Oscillation (ENSO) phase can have a significant impact on regional and single state property insurance companies," said Prasad Gunturi, executive vice-president, Willis Re. "In collaboration with Columbia University, we are working to develop a climate conditioned severe convective storm event set for portfolio probabilistic loss estimates. We hope the climate conditioned view of risk can help companies understand, manage and mitigate the regional and year over year variability in severe convective storm losses."

According to Willis Re, the report was written to increase understanding of the impact of ENSO on tornado and hail frequencies, and to introduce the concept of ENSO-conditioned event rates. Using data from Columbia researchers, Willis Re now plans to produce monthly forecasts of tornado and hail activity for client use.