Severe Thunderstorm Views of Risk for the Insurance Industry

Severe convective storms (SCSs), producing tornadoes, hailstorms, and damaging winds, are a natural hazard posing an escalating threat to the insurance industry. As insured SCS loss in the United States continue to increase, realistic views of severe thunderstorm risk are more crucial than ever to assist insurers and reinsurers in effective risk management strategy including underwriting and claims management. Leveraging climatological data and results from academic research, Guy Carpenter’s Severe Thunderstorm Risk Magnitude Index (SToRMi) has proven valuable in measuring and assessing the SCS hazard. While holistic assessment is sufficient for many applications, the frequency and occurrence of severe thunderstorms varies across different seasons and are subject to complex interplay between local weather patterns and large-scale atmospheric phenomena. We utilize SToRMi to analyze SCS occurrence and intensity across different timeframes and global oscillation phases (such as the El Niño Southern Oscillation), including monthly, seasonal, yearly, and decadal views. Results reveal insights that can help insurers and reinsurers understand seasonal variations in risk, anticipate peak periods, and highlight the importance of dynamic risk assessment in the risk selection processes.