UBS Forecasts Billions in Insured Losses from Upcoming Winter Storm

A major winter storm that recently swept across the United States is projected to result in billions of dollars in insured losses, according to analysts at brokerage UBS.

The storm has left much of the central and eastern U.S. grappling with snow, ice, and frigid temperatures. As of Tuesday, local officials and news reports confirmed that at least 38 fatalities had occurred across 14 states.

Beginning its severe impact on Friday, the storm caused significant disruptions, including snarled road traffic, widespread flight cancellations, and power outages. Although the storm subsided by Monday, the bitter cold is expected to persist.

“For insurers, there will likely be meaningful insured losses from commercial property and package policies, homeowners’ insurance policies, and auto insurance,” UBS analysts noted earlier this week.

Editor’s Note: AM Best Says Low Single Digits to $8B Possible

In a separate statement on Monday, Sridhar Manyem, senior director of Industry Research and Analytics at AM Best, indicated that losses from Winter Storm Fern are expected to be manageable for insurers and reinsurers overall.

“The event may not create insured losses at the same magnitude as Winter Storm Uri in February 2021—over $15 billion—but could rival the $8 billion in insured losses seen from Winter Storm Elliott in December 2022. Early estimates have placed Fern as a low-single-digit billion-dollar insured loss event,” he stated.

Manyem also highlighted that the volume of claims is likely to lead to a significant surge in demand for plumbers and other contractors, which will spike insurers’ loss adjustment expenses.

UBS added that the 2021 winter storm serves as the closest comparable event, resulting in catastrophe losses ranging from $15 billion to $20 billion for the insurance industry.

In recent years, catastrophe losses have intensified, significantly impacting profits across the industry due to substantial payouts related to widespread property damage, business interruptions, and liability claims.

It often takes weeks following such events to arrive at a more accurate figure for insured losses, as claims are filed and assessed.

UBS anticipates that the largest share of insured losses from the latest storm will stem from commercial property lines, followed by homeowners and personal auto insurance.

Commercial property losses typically arise when extreme cold damages buildings and disrupts operations, leading to issues such as frozen pipes, roof damage, and prolonged power outages. Additionally, personal auto claims tend to surge as icy roads and poor visibility contribute to accidents and vehicle damage.

Topics
Profit Loss
Windstorm

A major winter storm that recently swept across the United States is projected to result in billions of dollars in insured losses, according to analysts at brokerage UBS.

The storm has left much of the central and eastern U.S. grappling with snow, ice, and frigid temperatures. As of Tuesday, local officials and news reports confirmed that at least 38 fatalities had occurred across 14 states.

Beginning its severe impact on Friday, the storm caused significant disruptions, including snarled road traffic, widespread flight cancellations, and power outages. Although the storm subsided by Monday, the bitter cold is expected to persist.

“For insurers, there will likely be meaningful insured losses from commercial property and package policies, homeowners’ insurance policies, and auto insurance,” UBS analysts noted earlier this week.

Editor’s Note: AM Best Says Low Single Digits to $8B Possible

In a separate statement on Monday, Sridhar Manyem, senior director of Industry Research and Analytics at AM Best, indicated that losses from Winter Storm Fern are expected to be manageable for insurers and reinsurers overall.

“The event may not create insured losses at the same magnitude as Winter Storm Uri in February 2021—over $15 billion—but could rival the $8 billion in insured losses seen from Winter Storm Elliott in December 2022. Early estimates have placed Fern as a low-single-digit billion-dollar insured loss event,” he stated.

Manyem also highlighted that the volume of claims is likely to lead to a significant surge in demand for plumbers and other contractors, which will spike insurers’ loss adjustment expenses.

UBS added that the 2021 winter storm serves as the closest comparable event, resulting in catastrophe losses ranging from $15 billion to $20 billion for the insurance industry.

In recent years, catastrophe losses have intensified, significantly impacting profits across the industry due to substantial payouts related to widespread property damage, business interruptions, and liability claims.

It often takes weeks following such events to arrive at a more accurate figure for insured losses, as claims are filed and assessed.

UBS anticipates that the largest share of insured losses from the latest storm will stem from commercial property lines, followed by homeowners and personal auto insurance.

Commercial property losses typically arise when extreme cold damages buildings and disrupts operations, leading to issues such as frozen pipes, roof damage, and prolonged power outages. Additionally, personal auto claims tend to surge as icy roads and poor visibility contribute to accidents and vehicle damage.

Topics
Profit Loss
Windstorm