Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


09:24 AM
Connect Directly

A Rough Early Start to Tornado Season

Deadly tornadoes cut through Midwestern and Southern states yesterday still weary from last year's record outbreaks.

After a record year for tornado losses in 2011, the 2012 season got off to a tragic start Wednesday. Twelve people died in Illinois, Missouri, and Tennessee. From Reuters:

:The National Weather Service's Storm Prediction Center rated the Harrisburg (Illinois) tornado an EF-4, or one notch below the strongest tornadoes, meaning it packed winds of up to 200 miles per hour. The EF-4 rating put it on par with the devastating tornado that killed 64 people in Tuscaloosa, Alabama, last April, and one notch below the massive EF-5 Joplin storm that flattened whole sections of the Missouri town.

That's not good news for insurers, who are still recovering from that rare outbreak of strong tornadoes last year by redoubling their efforts to establish their exposure to tornado losses. Dr. Howard Botts, the EVP and director of database development for CoreLogic Spatial Solutions, a Santa Ana, Calif.-based provider of analytics and business intelligence, who said last year that total tornado losses in 2011 were $5 billion for the third-most active year on record, told Insurance & Technology this week that insurers are "looking at risk areas beyond what had been looked at, especially tornado and hail activity outside the traditional tornado alleys."

Ryan Ogaard, SVP of model management for RMS, added that his company's tornado models weren't in wide use by its insurer clients before last year. However, that is changing as insurers wake up to the potential of big losses from those storms, he adds.

"We weren't surprised by these events, but insurers weren't looking at the full potential of loss from this kind of peril," he explained. "There's a requirement growing that people need to create their own macro model of what their risk profile is. Take a look at the modeling environment as a whole, step back and say, 'What's my overall risk profile? Where should I focus my efforts, where are danger signs?'"

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

Register for Insurance & Technology Newsletters