AM Best’s initial viewpoints regarding the tornado outbreak across central and southern US states, which as detailed in its Best’s Commentary, “Tornado Outbreak Adds to 2021 Insurance Losses, but Appears to Be Earnings Event,” also include:
The severe damage from the tornadoes will dampen underwriting results for U.S. property/casualty insurers, which already have seen severe weather-related losses in 2021.
This tornado event is an outlier in terms of insurance events for December, which tends to experience low weather-related losses.
The growing number of tornadoes and severe weather events will lead to a re-examination of pricing and supply of aggregate reinsurance protection.
Ultimately, AM Best expects insured losses to be concentrated in the commercial multiperil and homeowners lines, with some losses borne by auto physical damage as well. Given the industry’s robust capitalization and risk management techniques, the outbreak likely will be an earnings event for the industry. In particular, the Kentucky insurance market is not concentrated, and so losses may be spread out among insurers. AM Best will monitor affected insurance companies as more clarity on losses becomes apparent.
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