Insured Loss From Tornado Outbreak Estimated at $3 Billion by KCC

December 14, 2021

The insured loss from the December 9-12 tornado outbreak that devastated parts of central U.S. has been estimated to be about $3 billion.

Catastrophe modeling firm Karen Clark & Company said its estimate includes damage from the tornadoes and winds and hail. This KCC estimate includes the privately insured damage to residential, commercial, and industrial properties and automobiles.

The late-season tornado outbreak affected at least six states, including Arkansas, Illinois, Kentucky, Mississippi, Missouri, and Tennessee. KCC notes that there have been 60 reports of tornadoes and over 350 reports of damaging wind gusts.

The death toll from the tornadoes has reached 80, with many people still missing, according to the Federal Emergency Management Agency (FEMA).

“The most significant damage has been observed in Kentucky, particularly in Warren and Graves counties, where hundreds of homes and businesses have been destroyed,” the KCC report says. “The tornado outbreak caused significant damage across the impacted states. There have been thousands of reports of damage and hundreds of reports of destroyed homes and businesses including factories and warehouses. Widespread effects across the impacted states range from torn off roofs and downed trees to demolished buildings. ”

According to KCC, the Kentucky businesses damaged include a TMS Automotive plant in Bowling Green, a candle factory and the downtown sector in Mayfield, a country club in Princeton, and numerous buildings in Barnsley. Dozens of homes were destroyed in Dawson Springs and in Princeton.

KCC said significant damage has also been reported in Arkansas, Illinois, and Tennessee, including a large warehouse in Trumann, Arkansas. Dozens of destroyed buildings were also reported in downtown Dresden and Newbern, Tennessee.

AM Best Sees Tornado Losses as Manageable for Insurers

AM Best analysts said they expect the tornadoes will dampen underwriting results for insurers and that, although supply chain and inflation challenges may exacerbate insurance losses, insurers will be able to absorb them. AM Best said insured losses are likely to be concentrated in the commercial multiperil and homeowners lines, with some losses borne by auto physical damage as well.

Fitch Ratings said the insured loss from the tornadoes could rival the $5 billion insured loss from the U.S. Midwest derecho event in August last year and will likely drive insurance industry natural catastrophe losses to the largest annual total in the U.S. since the 2017 record year (approximately $130 billion).

The KCC estimate would make this outbreak among the costliest disasters involving tornadoes for for insurers, according to data from insurance broker Aon. Previously, the costliest U.S. catastrophe involving tornadoes, based on insured losses, occurred in April 22-28 in 2011. A tornado outbreak that hit Tuscaloosa, Alabama and other areas caused $8.5 billion in insured damages based on 2020 dollars, according to the Insurance Information Institute. An August 8-12, 2020 Midwest derecho caused an estimated $8.2 billion in insured damage.

Top 10 Costliest U.S. Catastrophes Involving Tornadoes; Aon (1)
($ millions)
Estimated insured loss
Rank Date Event Location Dollars when occurred In 2020 dollars (2)
1 Apr. 22-28, 2011 Late April 2011 Super Tornado Outbreak AL, AR, GA, IL, KY, LA, MO, MS, OH, OK, TN, TX, VA $7,300 $8,490
2 Aug. 8-12, 2020 Includes Aug. 10 Midwest Derecho IA, IL, IN, KS, MI, MN, MO, NE, OH, SD, WI, PA, DC, MD, VA, WV 8,250 8,250
3 May 21-27, 2011 Joplin, MO Tornado AR, GA, IA, IL, IN, KS, KY, MI, MN, MO, NC, NE, NY, OH, OK, PA, TN, TX, VA, WI 6,900 7,990
4 May 2-5, 2003 AL, AR, CO, GA, IA, IL, IN, KS, KY, MO, MS, NC, NE, OH, OK, SC, SD, TN 3,205 4,570
5 May 27-30, 2019 CO, TX, OK, KS, AR, MO, IA, IL, IN, OH, PA, WV, WY, NJ, NY 3,650 3,730
6 Apr. 10-15, 2016 San Antonio Hailstorm TX, LA, OK, AR, MS, KS, MO 3,200 3,500
7 Apr. 6-12, 2001 St. Louis Hailstorm AR, CO, IA, IL, IN, KS, MI, MN, MO, NE, OH, OK, PA, TX 2,200 3,250
8 May 18-23, 2014 CO, DE, IA, IL, IN, MT, NY, OH, PA, SC, VA 2,950 3,240
9 Oct. 5-6, 2010 Phoenix Hailstorm AZ 2,700 3,230
10 Mar. 2-3, 2012 AL, GA, IN, KY, OH, TN 2,500 2,850
(1) Defined by Aon as severe convective storms including insured thunderstorm events and may include tornado, hail, damaging straight-line winds (derechos) and flash flood impacts from events. Includes events that occurred through 2020. Subject to change as loss estimates are further developed. As of February 23, 2021. (2) Adjusted for inflation by Aon using the U.S. Consumer Price Index. Source: Aon.

Photo: In this photo taken by a drone, buildings are demolished in downtown Mayfield, Ky., on Saturday, Dec. 11, 2021, after a tornado traveled through the region Friday night. A monstrous tornado killed dozens of people in Kentucky and the toll was climbing Saturday after severe weather ripped through at least five states, leaving widespread devastation. (Ryan C. Hermens/Lexington Herald-Leader via AP)

Topics Catastrophe Natural Disasters Profit Loss Windstorm

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