Report Estimates Potential Costs to U.S. Insurance Industry from a Repeat of 1974 Tornado Super Outbreak

April 6, 2004

Risk Management Solutions Inc. (RMS), a provider of products and services for catastrophe risk management, announced the release of an in-depth study of potential costs to the U.S. insurance industry from a recurrence of the Tornado Super Outbreak of April 3-4, 1974. Considered one of the worst weather disasters in U.S. history, the outbreak produced tornadoes across 13 states in a single day.

If the event were to happen today, RMS estimates that insured losses could reach as much as $3.5 billion from wind damage alone. This would exceed the record-setting losses from an outbreak in May 2003 that caused an estimated $3.13 billion in total insured losses, according to the Property Claims Service of the Insurance Services Office.

The 1974 Super Outbreak developed to the southeast of an extratropical low-pressure system near the Iowa-Illinois border. In total, 148 tornadoes spanned 13 states and impacted 900 square miles (2,330 square km) in less than 18 hours. As many as 15 destructive tornadoes occurred simultaneously during the outbreak. In total, 315 people were killed, more than 6,000 were injured, and over 27,500 buildings were damaged.

“The scale of the geographic area affected by this outbreak is unmatched, and therefore is often viewed as a worst-case tornado event,” said Kyle Beatty, RMS meteorologist. “However, despite the record loss potential of a recurrence of the 1974 outbreak, there are events that could cause substantially greater catastrophic loss. Many major metropolitan areas in the Midwest and South had the potential to be hit by tornados in the 1974 event, but were spared. If several of these metro areas were struck by significant tornadoes in the same outbreak, the loss could surpass the 1974 recurrence estimate by several times.”

The full report on impacts from the 1974 Super Outbreak and RMS’ reconstruction of the event is available at www.rms.com.

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