Insurers cannot afford to ignore the peril of real-life Twisters

MS Amlin’s Ed Pope examines the risk of tornadoes to the (re)insurance sector…

As the highly anticipated sequel to Twister comes to cinemas, it is not just Hollywood special effects that have evolved since the original film’s 1996 debut. For the insurance industry, a key question remains: is climate change driving an increase in the frequency and intensity of destructive storms and the hazards, such as tornadoes, associated with them?

The wind speeds generated by tornadoes are among the strongest on Earth. The Bridge Creek Tornado, which occurred in Oklahoma in 1999, had a highest confirmed wind speed of 321 mph. This is 106 mph faster than the most intense one-minute sustained wind speed from a hurricane (Hurricane Patricia in 2015).

Combined with their unpredictability (tornado warnings are still often less than 10 minutes), tornadoes represent a severe risk to both property and life where they occur.

Indeed, in the US, where tornadoes are most common, resulting annual fatalities have been greater than hurricanes for 16 out of the last 24 years, with tornado-related fatalities being 50 percent higher than those from hurricanes if we exclude the most deadly years for both phenomena.

From an insurance perspective, the costliest tornado outbreak occurred in April 2011 in the US. Occurring over four days from 25-28 April, 360 tornadoes were reported, including 11 EF4 and four EF5 tornadoes across 19 states – resulting in about $7bn of insured losses at the time.

However, tornadoes are only one component of severe convective storm losses for the insurance industry. Large hail and derechoes (straight-line winds which can exceed 100 mph), can also be generated from these weather systems. Indeed, large hail events dominate insured losses from severe thunderstorms, representing 50-80 percent of total thunderstorm-related claims.

Globally, the focus on severe convective storms among (re)insurers has increased as insured losses from this peril rise. In the US alone, insured losses topped ~$60bn in 2023. A key question has therefore been: is climate change driving changes in observed losses and event occurrence, and what will happen in the future?

Answering this question is a challenge for a number of reasons. First, global climate model resolutions are too coarse to resolve severe thunderstorms or the processes that generate them. Indeed, the resolution of most climate models is too coarse to resolve tropical cyclones and these are orders of magnitude greater than severe thunderstorms. Modelling therefore provides little insight into how these types of weather events will respond as global temperatures increase.

Second, the observation record is not entirely reliable and does not extend very far back in time. Until the widespread availability of Doppler radar in the 1980s, weather services were unable to remotely sense tornadoes, or large hail event occurrence. Even with this technology, it is unclear whether the tornadic vortex observed by Doppler radars has reached the ground.

As a result, event recording relied on observations by those impacted. Unsurprisingly, the number of events which were recorded were therefore greatest around urban conurbations and have increased in line with population change in many US states.

These observation biases are something that scientists and catastrophe model vendors have to overcome when trying to understand long-term trends and build catastrophe model event sets.

Despite these challenges, research conducted by brokers and (re)insurers has shown that the change in observed losses in the US has been driven primarily by changes in exposure. This is a consequence of increases in at-risk populations, expansion of human infrastructure and activity, and long-term inflation. Only a small proportion of the increase in insured losses was found to be directly attributable from climate change.

Yet despite this, it is crucial that we continue to monitor the impact of climate change on severe thunderstorms. Building codes in many affected US states remain below the standards required to withstand severe thunderstorm generated hazards.

Meanwhile, sea surface temperatures in the Gulf of Mexico, which help to fuel severe thunderstorm activity by providing warm moist air, remain high. Global sea surface temperatures broke records in 2023, with no rapid reduction in 2024.

They are also unlikely, with continuing climate change, to fall back to levels seen in the 2000s, potentially extending the season favourable for the development of severe thunderstorms. This is borne out in insured loss data for the US, which suggests an increase in larger loss events outside the traditional thunderstorm season (March-May).

While this could also be a function of growing exposure, the traditional season for insured losses is extending – something the insurance industry must continue to closely monitor. As the fictional storm chasers of Twister return to the big screen, the real world implications of shifting weather patterns and their consequences cannot be ignored.

Dr Ed Pope is a geoscientist in MS Amlin’s exposure management team