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KCC Estimates Winter Storm Elliott Guaranteed Loss At $5.4bn

Analysts at catastrophe risk modeling firm Karen Clark & Company (KCC) have estimated that the insurance industry loss from Winter Storm Elliott in the US will be $5.4 billion across 42 states.

This estimate contains the privately insured damage to residential, commercial, and industrial properties and automobiles.

Elliott brought cold arctic air southward into the US over the Christmas period, plummeting temperatures to under 20°F below average across most of the Eastern US.

The storm caused significant damage across much of the country, even lengthening northward into Canada and south over the Mexican border.

The most impacted states were Texas, Georgia, Tennessee, North Carolina, and New York, where a state of emergency was declared after conditions including four feet of snowfall left residents around the city of Buffalo tangled inside homes and cars, with at least 63 deaths reported.

Sub-freezing temperatures also reached the Gulf Coast and lingered over the Southeast US where tens of thousands of homes and industries suffered power outages from high winds.

KCC notes that the freezing temperatures account for the vast majority of its estimated insurance industry loss, which can result in widespread infrastructure disruptions and burst pipes throughout the residential, commercial, and industrial sectors. Overall, analysts anticipate that commercial losses are projected to account for over 50% of the insured losses.

While KCC is the first firm to publicly reported a projected loss for the insurance industry, sources across the market seem to agree that the winter storm will constitute a multi-billion-dollar insured loss.

However, it’s not expected to generate a loss close to the 2021 Texas Freeze, which resulted in $15 billion of insured damages and hundreds of deaths after many homes and businesses were left without power for several days.

Comparing the events, KCC observes that Winter Storm Elliott had “key differences” that lessened its potential impacts, the most significant of which was the 2-day duration of the coldest temperatures in Texas this time around, versus 4 days for the 2021 event.

That said, Elliott did bring colder sub-freezing temperatures to the Southeast of the US, which were not severely impacted during the 2021 winter storm, and also spawned an extratropical cyclone that explosively intensified over Southern Canada and produced blizzard conditions over a large swath the north-central and northeastern US.

Meteorologically, KCC notes that the closest analog event to Elliott is December 1989 which also featured a strong extratropical cyclone, although that storm was confined to the Southeast coast and did not impact as large a region of the US as Elliott did.

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