AIR Estimates $2.2 Billion-Plus Insured Losses to Storms

May 14, 2003

AIR Worldwide Corp., a leading catastrophe modeling company, estimates that losses from the recent outbreak of severe weather in the central United States could exceed the $2.2 billion loss caused by a severe weather system on April 6-12, 2001, making it the largest insured loss for a severe thunderstorm system in history.

AIR’s estimate covers the period from May 2 through May 11 and includes more than 18 states. The 72-hour period with the highest industry loss was May 4 to May 6, representing more than 50 percent of the total insured loss.

“This event is one for the record books in meteorological terms and very possibly in financial terms,” said Uday Virkud, senior vice president at AIR. NOAA’s Storm Prediction Center received more than 400 reports of tornadoes before the pattern broke on May 11th.

There were approximately 2,500 reports of straight-line winds and hail. This highly unusual weather system was caused by a stationary weather pattern that started during the last week of April. It resulted in a jet stream pattern that persisted in the same position for nearly two weeks, resulting in a nearly continuous threat of severe weather during that time.

“The high financial losses from the system can be attributed to the duration of the weather system and the sheer number of individual tornadoes, hailstorms and straight-line windstorms,” Virkud concluded.

AIR derives its insured loss estimates by collecting data for each individual event within the larger system, including tornadoes, hailstorms and straight-line wind storms. Once the data is collected and analyzed, it is run through AIR’s severe thunderstorm model.

The model includes highly detailed property exposure information to capture the localized nature of severe thunderstorms. The engineering component of AIR’s model determines property damage by calculating the impact of wind and hail on property. AIR dispatched a team of engineers to survey the damage.

Topics Catastrophe Profit Loss Windstorm

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