Winter Storm Uri to Generate Billions in Insured Losses: Moody’s

February 18, 2021

The massive winter storm that barreled through the mid-section of the United States and across the South in mid-February, hitting Texas particularly hard, will generate billions in insured losses, according to commentary by Moody’s Investors Services.

The storm, which has been dubbed Winter Storm Uri, brought “snow, ice and some of the coldest temperatures in decades, particularly in Texas and across the Southern U.S.” over the Valentine’s Day weekend, extending into President’s Day on Feb. 15 and throughout the following week. Millions were left without power, and in many cases water, from the storm which has also been attributed to dozens of deaths.

“We expect insured losses for US P&C insurers to total in the billions of dollars, with claims from homeowners, commercial property, and auto lines of business,” Moody’s said in its report.

The Insurance Council of Texas (ICT) has said the storm “may be the costliest winter weather event in the state’s history.” Hundreds of thousands of claims are expected as a result of the storm, according to ICT spokesperson Camille Garcia. The Independent Insurance Agents of Texas said in a statement on its website that it “is expected to be the largest insurance claim event in Texas history.”

“The last winter storm event to exceed $1 billion was Winter Storm Quinn, which hit the Northeastern US states in March 2018,” — Moody’s Investor Services

Property damage both inside and outside of homes and commercial structures will result from snow and ice on the exterior of buildings, and “flooding and other water damage caused by frozen and broken pipes,” inside the impacted properties, Moody’s said.

Homeowners and commercial property cover water losses caused by frozen and broken pipes inside insured buildings.

Business insurance claims may also include utility service interruption coverage, “which is optional in many commercial property policies,” Moody’s said.

“There is an endorsement available for business income policies that provides coverage for lost business income due to loss of utility service. However, the loss of business income due only to the severe weather is not likely covered,” explained Patrick Wraight, director of Insurance Journal’s Academy of Insurance.

Coverage for loss of utility service “generally has a specific interruption period such as 24 or 48 hours before coverage is triggered. With swaths of Texas lacking power and/or water for more than 24 hours, service interruption losses could accumulate for commercial property insurers depending on how long the interruptions persist,” according to Moody’s.

Auto insurers will also be on the hook for significant claims in states where icy roads have led to high numbers of accidents, especially in states where drivers are not used to driving in snowy conditions.

According to the Texas Department of Insurance 2020 Annual Report, homeowners insurers write more than $10 billion in homeowners coverage in the state, while the private passenger auto insurance market exceeds $23 billion.

Texas Top 10 Homeowners Insurance Companies by Market Share
Company Premium % Market Share
State Farm Lloyds $1,861,662,775 18.52
Texas Farmers Insurance Co. 855,382,665 8.51
Allstate Vehicle and Property Insurance Co. 798,926,947 7.95
United Services Automobile Association 399,387,899 3.97
USAA Casualty Insurance Co. 330,088,287 3.28
Allstate Texas Lloyd’s 325,343,326 3.24
Safeco Insurance Company of Indiana 314,608,708 3.13
Liberty Insurance Corp. 284,016,397 2.83
ASI Lloyds 227,903,195 2.27
Texas Farm Bureau Mutual Insurance Co. 201,011,373 2.00
Total All Homeowners Insurers $10,049,707,575 100.00

Source: TDI

Top 10 Private Passenger Auto Insurance Companies by Market Share
Company Premium % Market Share
State Farm Mutual Automobile Insurance Co. $3,121,753,611 13.43
Progressive County Mutual Insurance Co. 3,102,637,389 13.35
GEICO County Mutual Insurance Co. 2,340,280,589 10.07
Allstate Fire and Casualty Insurance Co. 2,015,826,925 8.67
Farmers Texas County Mutual Insurance Co. 1,539,231,940 6.62
Liberty County Mutual Insurance Co. 1,029,218,616 4.43
United Services Automobile Association 638,782,826 2.75
USAA Casualty Insurance Co. 580,566,241 2.50
Consumers County Mutual Insurance Co. 530,895,178 2.28
USAA General Indemnity Co. 406,224,020 1.75
Total All Private Passenger Auto Insurers $23,241,970,616 100.00

Source: Texas Department of Insurance

Record Cold

In a media advisory, Air Worldwide reported that in mid-February, 39 states in the continental U.S. fell under “some type of winter weather advisory or storm alert — the largest region under a winter storm warning since 2005.”

The catastrophe modeling firm reported that over “2,000 cold temperature records were set, from New Orleans (25°F, record was 29° in 1993) to Dallas (-1°F, record was 12° in 1903) to -31°F in Lincoln, Nebraska. Wind chills in the Dallas region reached as low as -15°F and between 3 and 6 inches of snow blanketed the area.”

More than 100 million in the U.S. have been affected by the storm. According to Air Worldwide, as of Feb. 16 “the country set a new record for the largest area of the United States ever blanketed in snow, 73% of the nation (since 2003 satellite records were kept).”

Related:

Was this article valuable?

Here are more articles you may enjoy.