Winter Storm Uri Insurance Losses

According to catastrophe modelers and insurance industry market researchers, insured damages in Texas from Winter Storm Uri, which hit the state in mid-February, are expected to be $10 billion to $20 billion.

According to S&P Global Ratings, Uri losses may be "somewhat similar" to those from Hurricane Harvey, a Category 4 hurricane that hit Texas and Louisiana in August 2017. In a February 26 media statement, the market intelligence company said it was still "too early to reliably estimate the insured damages considering the complexity of the event."

AM Best said in a study released on February 19 titled "Potential Record Catastrophe Losses for Texas Insurers Due to Winter Storm Uri" that the heaviest amounts of claims resulting from Uri are expected to come from "homeowners, commercial land, and auto lines of business." The "surge in demand for contractors and building materials," according to the rating agency, would be a "significant" loss contributor.

Water damage and flooding in building interiors due to frozen and damaged water pipes can result in lawsuits, in addition to property damage outside residential buildings from snow and ice. "Household insurers can be liable for accommodation costs and extra living expenses for families who need shelter when their homes are uninhabitable due to cold weather, depending on insurance coverage terms," AM Best said.

Commercial property may be subjected to the same forms of property damage as residential structures. Additionally, commercial lawsuits are likely to emerge from companies that have incurred damages due to the power outages, according to AM Best. "Extended power outages may result in losses for primary insurers as well as reinsurers," AM Best added.

According to the rating firm, "personal auto insurers in Texas and other states will likely face substantial rises in claims from a rise in accidents" due to the "heightened perils of driving on slippery, snowy Texas streets, roads, and highways."

On February 26, the Texas Department of Insurance sent a data request to insurers for information on claims related to the extreme winter storm that hit the state from February 11 to 19. The first report for data as of February 28 is due on March 31. TDI reported that subsequent messages are due at the end of each month.

Karen Clark & Co., a catastrophe modeling firm, has estimated insured damages from the storm at about $18 billion. According to S&P Global, Hurricane Harvey caused $19 billion in insured damages in Texas and $30 billion across the United States.

Industry-insured damages in Texas "appear likely to surpass $10 billion," according to AIR Worldwide, which estimates "average claims severity values of $15,000 for residential risks and $30,000 for industrial risks." However, various factors could cause the $10 billion figure to rise dramatically, according to the catastrophe risk modeling company. "A higher than expected rate of claims among those risks impacted by a prolonged power outage, whether utility service disruption coverages payout, greater than expected impacts from demand increase, government interference, and whether claims from mold damage begin to emerge as a significant source of loss," according to the study.

Chuck Watson, a catastrophe modeler for Enki Research, estimated that damages from the prolonged freeze and power outages in Texas could exceed $90 billion, with about $20 billion of those losses covered by insurance Bloomberg report.

Winter storm Uri took out the electricity for millions in Texas for days, and the freezing temperatures caused pipes to burst. According to AIR, several places endured their longest-ever, continuous freeze, with Waco, Texas, "staying below freezing for 203 consecutive hours — 53 more than the previous record." On February 15, at the height of the cold, the average temperature in Texas was just 12 degrees Fahrenheit, or 6 degrees lower than the average temperature in Alaska on the same day."