December saw storm Elliott, a winter freeze grip much of America. The storm began on the pacific coast moving across northern America and intensified around the great lakes becoming what is known as a “bomb cyclone”. A bomb cyclone refers to when the central pressure of a low pressure system drops 24 millibars within 24 hours, simply a storm that intensifies quickly and results a more severe storm than expected.  Although this was a very wide spread storm, impacting 42 of the 50 states in the union, early data from modelling agencies suggests that this will not be a significant event for the reinsurance market, particularly when compared either to this year’s Hurricane Ian, or February 2021’s winter storm Uri. Insured losses for these two events were put at $60 billion and $15 billion respectively.

Early analysis from modelling firm Karen Clark & Company (KCC) places the insured loss of Storm Elliott to be $5.4bn with 50% of this with commercial insurers. The storm is therefore more comparable to winter storms of 1983 and 1989 than Uri in 2021. The main cause of the loss are the freezing temperatures causing burst pipes in both residential and commercial buildings and impacting infrastructure.

We expect Storm Elliott will have a limited impact on Lloyd’s syndicates; the size of loss means primary carriers losses won’t reach the attachment point of reinsurance. There will undoubtedly be some exposure under binding authorities, written to local coverholders in both the homeowners and commercial markets. However, Lloyd’s market share in some of these states is relatively small.