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Natural Disasters

Severe thunderstorms in the USA cause billions of dollars in losses

Natural catastrophe review for the first half of 2017

In the first half of 2017, a series of powerful thunderstorms in the USA caused losses in the billions. The natural catastrophe review to the end of June 2017 was also unusual for another reason: from a global perspective, losses were below average. In fact, overall losses were the lowest for ten years. This was a random outcome as losses fluctuate strongly. An overview.

Overall, natural catastrophes in the first half of 2017 caused losses of US$ 41bn, compared to  US$ 111bn in the first half-year of 2016. Of this total, US$ 21.5bn, or approximately half of all losses, was uninsured. By way of comparison: on average, over two thirds of all losses were uninsured over the last ten years. Loss drivers in the first six months were the high number of severe hailstorms and tornadoes in the USA. This series of storms included three of the five of the most expensive events in the first half of the year. The highest loss over the period was from a flood catastrophe that struck the north of Peru and the capital city, Lima. The overall loss here was US$ 3.1bn.

A series of powerful storms in the USA causes large losses in the first half of 2017.

Regional overview: USA: Series of hailstorms and tornadoes

There were six large-scale thunderstorms, each of which caused billions of dollars in losses. Overall losses from severe thunderstorms in the USA in the first half of the year came to US$ 18.5bn, well above the average. US$ 13.5bn of this was insured. This marks the eighth time in the space of just ten years that insured losses from thunderstorms in the USA have exceeded the US$ 10bn mark. Thunderstorm losses were also the third highest ever in the USA for the period January to June.

During the first quarter in particular, unusual atmospheric conditions provided the perfect environment for the development of supercell thunderstorms. These invariably produce major hailstorms and tornadoes. In several instances, the loss drivers were hailstorms with hailstones as big as 11 cm.

There was also the fact that, this year, the tornado season began early and with a bang: the number of tornadoes observed in the first quarter of 2017 was twice as high as the average for the years 2005–2015, although tornado activity eased somewhat thereafter. The number of sighted tornadoes up to the end of June (over 1,100) was still higher than the average for this period (1,000).

Costliest event for insurers in the first half of 2017 was a powerful thunderstorm in the USA.

“Coastal El Niño” could have helped increase the frequency of severe thunderstorms

We believe there is a connection between the large number of severe thunderstorms in the USA and a climate phenomenon off the coast of Peru in the first quarter that the Peruvian weather service has called “El Niño Costero”. According to data from the US weather service NOAA, the temperature in the tropical eastern Pacific off the coast of Peru – known by scientists as the Nino 1+2 region – increased by 1.5 degrees by the end of March compared with the long-term average, and by as much as several degrees in some places. At the same time, there was a cooling of the equatorial Pacific further west close to the International Date Line (in Nino 4 region). Such differences in temperature may cause teleconnection events along the equatorial Pacific that can alter the atmospheric circulation over the USA, increasing the likelihood of a large number of severe thunderstorms. Off the coast of Peru itself, the higher rate of evaporation led to more clouds forming, which then triggered torrential rain in the Andes, causing severe flooding.

This abnormal warming, known as coastal El Niño, subsided again from April 2017 and did not lead to a full-blown El Niño phase. This is one of the two forms of the natural climate oscillation ENSO (El Niño/Southern Oscillation) in the Pacific which has a major influence on global weather patterns. Recent forecasts indicate that instead of the anticipated weak El Niño phase, the second half of 2017 is more likely to experience neutral conditions.

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Floods in Peru

Following persistent rain in Peru in February and March, numerous rivers burst their banks, causing severe flooding, landslides and mudflows. Large areas in the north of the country (Piura, Paita, Ayabaca, Tumbes and Lambayeque) were devastated, and even the area around Lima was affected. The Peruvian capital, with its 10 million inhabitants, is situated on the Pacific coast, a flat region that generally experiences only slight rainfall. On dry soil with little vegetation, rainwater accumulates on the surface instead of soaking into the earth. Many people were killed in the floods, with infrastructure and more than 200,000 buildings severely damaged.

Due to the low insurance density, only a small fraction of the overall losses of US$ 3.1bn was insured. The insured loss was just US$ 380m. The insured portion was still higher than the national average: in the past, only about 9% of natural catastrophe losses have been covered by insurers.

The highest overall losses in the first half-year 2017 were caused by the floods in Peru.

Cyclone Debbie was the second-most expensive natural catastrophe

Nat cat losses in the Asia-Pacific region and in Australia in H1 2017 were US$ 9.2bn, with US$ 2.1bn insured. Losses from natural catastrophes in Asia were therefore also lower than usual. The most serious event was Cyclone Debbie, which hit the coast of Queensland in the northeast of Australia. Debbie made landfall at the end of March with wind speeds of up to 190 km /h in the sparsely populated area around Airlie Beach. It was a category four cyclone (the second-highest) and when it came ashore, it destroyed many older buildings that were not as sturdy as structures built in accordance with building regulations today. It also became apparent that a portion of the losses could have been avoided if buildings and facades had been made more storm-resistant and better equipped to stop water getting in. The overall loss was US$ 2.7bn, with US$ 1.4bn insured.

Steady rain and thunderstorms from 22–26 June caused serious flooding in many parts of China. The Yangtze and several of its tributaries burst their banks, triggering landslides in many places. The heavy rainfall occurred in the annual rainy season, known in China as “mei-yu” or plum rain, because it follows the plum harvest in May and June. The plum rains around this time generally feature steady rain or intense thunderstorms, which can then trigger serious floods on areas of flat land in central China. The overall loss was US$ 2bn and, according to current estimates, it is primarily the agricultural sector that is affected.

Losses in Europe: Series of storms, cold snap in late spring

Some unusual weather events in Europe made a substantial contribution to the overall losses of €4.4bn, of which €1.7bn was insured. One event with very high losses that will not be remembered by many as a real natural catastrophe was a cold snap in April that affected a number of European countries. Temperatures as low as minus 7 degrees and snowfall in many parts of Europe in the second half of April resulted in serious frost losses in the agricultural sector, mainly vineyards and orchards. This was an extremely unusual event, both because of its wide geographical spread and the severity of the losses. At US$ 1.5bn, the overall losses were high, largely because plant growth was well advanced thanks to mild temperatures over the preceding weeks.

Storms bringing torrential rain and large hail caused serious flooding in parts of northern and eastern Germany at the end of June. Thunderstorms and persistent heavy rain caused serious floods in Berlin and the surrounding area. The average annual rainfall in the German capital is 600 mm, and the average in June is 60 mm. But on 29 June, Berlin-Tegel experienced over 150 mm of rain – more than a quarter of the annual total. In the north of Berlin, rainfall amounts of up to 240 mm were recorded, the equivalent of 240 litres per square metre.

According to initial estimates, the floods and preceding bad weather in other parts of Germany caused an overall loss of €800m. Figures provided by the German Insurance Association (GDV) indicate that insured losses may be in excess of €0.5bn. Most of the losses involved hail damage to agriculture.

Fortunately, when measured against the average figures for the last ten years, the nat cat review for the first half of 2017 was relatively mild. Individual events, such as the series of severe thunderstorms in the USA and the floods in Peru, once again highlighted the importance of having in-depth knowledge of the climatic processes that influence extreme weather. It is also important to understand and leverage the potential for avoiding losses by making buildings more resistant to the forces of nature.

Munich Re Experts
Peter Höppe
Head of Geo Risks Research/Corporate Climate Centre, Munich Re
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