Aon Benefield’s Impact Forecasting has launched its US severe thunderstorm (STS) scenario model to help insurers more accurately estimate annual losses based on historical data.
Severe thunderstorms can produce damaging winds in excess of 57 mph, hail of 1 inch in diameter or greater, and occasionally tornadoes.
According to Aon Benfield, the costliest US thunderstorm outbreak on record occurred in later April 2011 across the Lower Mississippi Valley and cost insurers $7.7 billion.
Aon Benfield claims that over the last 10 years, severe thunderstorms have overtaken tropical cyclone as the costliest peril for US insurers on an average annual basis.
The new model, STS RePlay, incorporates the last 12 years of historical severe thunderstorm data from the Storm Prediction Center and replays it to create nearly 7.5 million scenarios that are used to calculate average annual losses.
Stephen Hofmann, executive managing director at Aon Benfield, added: “Over the last decade, severe thunderstorms have contributed towards an increasingly large portion of the insurance industry’s global catastrophe losses.”
“The roll out of Impact Forecasting’s new STS model now means that insurers and reinsurers can effectively manage their risk and use the model’s transparency to explain the details of their loss numbers and create their own view of risk from this peril.”
