SCS continues to wreak havoc – how should insurers respond?

As 2024 progresses, secondary peril events, particularly severe convective storms (SCS), will continue to cause significant damage to residential property, commercial establishments and their insurers, according to General Re’s latest report.

Forecasts at the beginning of the year suggested that a rapid transition from an El Niño to a La Niña climate cycle, along with other factors such as the Sun entering its solar maximum, would lead to an unusually severe SCS season in 2024. will cause A higher-than-average number of storms, the most significant activity since 2020 and 2021.

Additionally, warm and humid conditions were expected to result in more tornadoes than hail events, in contrast to cooler, drier environments that typically promote hail formation.

Gen Re’s analysis through the end of July supports these predictions. Hurricane events are approaching historic highs, both in terms of numbers and annual trends.

At the same time, the frequency of wind events – including tornadoes, gusts, and damaging winds – is well above historical norms.

In contrast, the number of hail events containing stones at least 1 inch in diameter is trailing historical expectations, consistent with expected changes in weather patterns. Nevertheless, extreme weather is increasing both the frequency and severity of losses.

According to General Re’s insight, whether or not these trends persist is uncertain, but the implications for the insurance industry are clear. In this volatile environment, proactive risk management and careful accrual control are essential.

Additionally, pricing strategies must adapt to the increased uncertainty caused by these changing weather patterns.

In a separate report, Demex noted that insured losses from severe convective storms (SCS) accounted for the majority of global catastrophe losses in the first half of 2024, with insurance payouts to the United States increasing significantly. is facing

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