OLDWICK, NJ – (BUSINESS WIRE) – While AM Best believes insurance companies will be able to absorb losses from the recent and deadly US tornado outbreak, supply chain challenges and inflationary pressures can exacerbate insurance losses.
AM Best’s initial positions on the tornado outbreak in the central and southern states, which include in its Best comment “Tornado outbreak adds insurance losses in 2021 but what appears to be a profit event,” also include:
The severe damage from the tornadoes will dampen the underwriting results of U.S. property and casualty insurers, which suffered severe weather-related losses as early as 2021.
This tornado event is an outlier in terms of insurance events for December, which tends to suffer minor weather-related damage.
The growing number of tornadoes and storms will lead to a review of pricing and reinsurance coverage.
Ultimately, AM Best expects the insured damage to be concentrated in the lines of commercial multi-risk and homeowners, with some damage also being borne by car damage. Given the industry’s robust capitalization and risk management techniques, the breakout is likely to be a winning event for the industry. In particular, the Kentucky insurance market is not concentrated so losses can be shared among insurers. AM Best will monitor affected insurance companies as soon as there is more clarity about the damage.
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