Thursday, May 2, 2013

It's tornado time, and insurance rates are spinning up

http://money.msn.com/now/post.aspx?post=25acdfc9-bca1-4c2d-9173-d38f3ef9e99d


People in Oklahoma are watching the skies with particular care these days as their region enters what is historically one of its worst seasons for severe weather. On May 10, 2010, a total of 55 tornadoes swept across the state -- including two massive, EF4 twisters that hit metro Oklahoma City, killing three people and injuring more than 80 others.

"Anything can happen in any given year," National Weather Service meteorologist Rick Smith told KFOR-TVin Oklahoma City, "but certainly these first 10 to 15 days in May are really prime time for tornadoes in the state."

Tornadoes have occurred in nearly every U.S. state and at all times of the year, but every spring and into summer, the Lower 48 enters a period of increasing frequency and strength for these lethal -- and economically devastating -- weather systems.

The Insurance Information Institute says two of the most costly natural disasters in recent years in terms of property damage have been tornadoes. The April 2011 tornado in Tuscaloosa and Birmingham, Ala. ($7.3 billion in insured property losses) left 65 people dead. And another series of severe weather the following month, including the tornado that tore through Joplin, Mo., that killed 161 people, led to a $2.1 billion in insurance claims. All told, nearly $7 billion in claims were paid due to severe weather in the U.S. just for the period of May 20 to May 27, 2011.

According to Munich Re (MURFG), the world's largest insurance company, $5 billion in losses resulted from tornadoes during a three-day outbreak in March 2012, of which only 50% was insured. And while that damage toll is less than in previous years, it was just one-tenth of the overall losses inflicted by Superstorm Sandy last November.

In fact, as instances of severe weather events grow, concerns are mounting that the insurance industry might be shifting more of the risk and costs for these catastrophes back onto consumers and taxpayers.


Tornado in Nebraska (© Gene Rhoden/Weatherpix/Getty Images)

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