Reinsurers: Tornado Claims Could Top $2 Billion
Although the tornado which struck the Oklahoma town of Moore this week [May 20] could become the largest single catastrophe insured loss event of the year in the US, Bermuda and global reinsurers are cautiously optimistic that the catastrophe will have no major impact on pricing in the market.
A recurring concern after any large-scale disaster is whether it will effect global prices for reinsurance — the added layers of insurance which insurance companies buy to defray payouts they make after catastrophic events.
Early industry reports estimate insured losses from the Oklahoma storm — which killed more than 50 people — in the hundreds of millions of dollars, possibly topping $2 billion.
Even at the high range of those estimates, the storm wouldn’t be enough to have a noticeable impact on the reinsurance market, Bob Hartwig — an economist and president of the Insurance Information Institute — told the “Tampa Tribune” today [May 23].
Mr. Hartwig said at $2 billion “that’s one-twentieth the cost of [Hurricane] Sandy.”
The US National Weather Service [NWS] reports the Moore tornado was an EF-5 event with winds of at least 200 miles per hour — the first tornado to reach level 5 on the enhanced Fujita scale in 2013.
The track of the tornado was 17 miles long and it was on the ground for approximately 45 minutes. The twister’s path was 1.3 miles wide.
Slideshow of images after the tornado, courtesy of the U.S. Defence Department:
Oklahoma Insurance Commissioner John Doak told the Reuters news agency that losses from the Moore tornado were likely to surpass those suffered in the Joplin tornado in 2011.
The Joplin, Missouri tornado event in May, 2011 resulted in an insured loss of at least $2.2 billion, the number is still rising as claims still get settled.
Blue Capital Global Reinsurance Fund’s Bermuda investment manager today [May 23] said it does not expect losses from the Oklahoma tornado to be material to the company.
The company said its investment manager Blue Capital had started its normal post-event procedures to estimate any loss to the company.
A spokesperson added: “Based on current information, we do not expect this loss event to be material to the company. We will provide an estimate of any potential loss in due course.”
Blue Capital Management Ltd., which serves as the investment manager for both the company and Blue Water Master Fund Ltd., provides catastrophe reinsurance-linked investment products to institutional and retail investors.
Blue Capital is wholly owned by Montpelier Re Holdings Ltd., a leading Bermuda-based global provider of property catastrophe and short tail reinsurance solutions with over $4 billion of assets.
And specialist Bermuda based reinsurance-linked investment business CATCo Investment Management, which underwrites and manages portfolios of catastrophe reinsurance and retrocessional contracts using investment clients assets, also says it expects no meaningful impact to its 2013 portfolio if the insured losses related to the tornado remain below $5 billion.
