RMS Releases U.S. Severe Storm Report As Peak Tornado Season Approaches
Newark, Calif – April 20, 2009 – As the peak tornado season rapidly approaches in May, Risk Management Solutions (RMS), the world�s leading provider of products and services for catastrophe risk management, has released a special report analyzing the impact of the 2008 U.S. severe convective storm season. Last year�s season, which included nearly 1,700 tornadoes, was the costliest in the last decade, with over U.S. $10.5 billion in insured losses, and the second most active on record. Although, by chance, there has not been such a severe season for a number of years, RMS analysis reveals that a season similar to 2008 could occur once every four to five years on average.
Severe storms include tornadoes, hail, straight-line winds, lightning strikes and flash flooding. Hail storms account for more than 60 percent of the average annual loss (AAL) compared to 25 percent for tornadoes and 15 percent for straight-line winds, primarily because hail storms cover a larger area and occur more frequently and in coordination with tornadoes. Almost half of the total insured loss last year was caused by the five largest events.
“The degree of early season activity caught many off guard, reeking extreme havoc, amplifying losses and exhausting many aggregate insurance covers,� said Matthew Nielsen, product manager at RMS. �While many insurers were surprised, our analysis shows this level of loss could be expected as frequently as once every four to five years on average. This means there�s potential for far more extreme loss seasons, and insurers should quantify and manage their exposures to this peril as they would hurricanes and earthquakes to help avoid future unpleasant surprises.”
Last year, RMS launched the new RMS� U.S and Canada Severe Convective Storm models covering broad geographical areas including the most active regions of severe convective storms globally, with the Midwest and Great Plains regions of the U.S. and the Prairie Provinces and Ontario in Canada at greatest risk. The models incorporate numerical simulation output together with weather observation data, such as radar interpretation, damage surveys and industry claims information.
To view the U.S. Severe Convective Storm Report, please visit: http://www.rms.com/Publications/2008_US_Severe_Convective_Storm.pdf
Risk Management Solutions is the world�s leading provider of products and services for catastrophe risk management. More than 400 leading insurers, reinsurers, trading companies, and other financial institutions rely on RMS models to quantify, manage, and transfer risk. Founded at Stanford University in 1988, RMS serves clients today from offices in the U.S., Bermuda, the U.K., France, Switzerland, India, China, and Japan. For more information, visit our website at www.rms.com.