March 2025: A Billion-Dollar Weather Event
Between March 13 and 16, 2025, parts of the United States were battered by extreme weather, leading to significant damage and hazards. Preliminary estimates by reinsurance broker Gallagher Re suggest that insured losses range from $1 billion to $3 billion, marking it as the first severe convective storm (SCS) event of the year to reach the billion-dollar threshold.
Steve Bowen, Chief Science Officer at Gallagher Re, highlighted that over 100 tornadoes have been confirmed, including 13 rated either EF3 or EF4. The storms also brought forth significant hail, damaging winds, flooding, and wildfires, particularly intensified by non-convectively driven winds.
Record-Breaking Seasons
As the peak season for US SCS (April through June) approaches, it is noteworthy that both 2023 and 2024 experienced a record of 10 distinct multi-billion-dollar events. According to Gallagher Re, damages from the latest event—primarily involving wind and hail—affected homes, businesses, vehicles, and agriculture across the Midwest, Southeast, and East Coast. These are typically covered by standard insurance policies. However, additional losses resulted from wildfires in Oklahoma and Kansas, exacerbated by intense winds.
Prior to this event, the 2025 SCS season was relatively subdued, with insured losses totaling approximately $1 billion, significantly lower than the figures recorded in the early months of 2023 and 2024.
Insurance Industry Impact
Gallagher Re stated, “The rising financial cost of severe thunderstorms in the US has become a major topic in the insurance industry, as underwriters strive to enhance combined ratio performance with this peril.” The broker’s report indicated improvements in US market combined ratios in 2024 following a challenging 2023.
The SCS peril has evolved into a ‘new normal,’ where annual nominal insured losses frequently exceed $40 billion. In 2024, the US experienced a record-tying 10 multi-billion-dollar insured loss SCS events, the same number as in 2023.
Socioeconomic and Environmental Factors
Over the past two seasons (2023-2024), insured losses have exceeded $123 billion, with a record-setting $65 billion in 2023 and $58 billion in 2024 (adjusted for inflation). While large hail often accounts for 50% to 80% of insured SCS losses, recent events highlight the significant impacts of tornadoes and straight-line winds, especially in densely populated regions.
Though climate change contributes to these events, the sharp increase in losses is largely driven by socioeconomic factors, such as urban expansion, the proliferation of housing units, rising costs of construction materials and labor, inflation, and overall greater societal wealth.
Tragic Consequences
Despite forecasts by the NOAA Storm Prediction Center and local National Weather Service offices predicting the outbreak nearly a week in advance, reports indicate that more than 40 lives were lost due to the recent severe weather events.
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