Winter storm will cause billions of dollars in insured losses, UBS estimates

A major winter storm that has hit the United States in recent days is expected to cause billions of dollars in insured losses, analysts at brokerage UBS said in a note.The heavy storm has left much of Central and Eastern America in the grip of snow, ice and subzero temperatures. At least 38 people had died in 14 states as of Tuesday, according to local officials and news reports.

The storm began to intensify on Friday, with snow lashing road traffic and leading to widespread flight cancellations and power outages. Temperatures eased on Monday, but left a bitter cold that is expected to persist.

“For insurers, significant insured losses are likely to arise from commercial property and parcel policies, homeowners insurance policies and auto insurance policies,” UBS analysts wrote earlier this week.

The brokerage added that the 2021 winter storm was the most comparable event, which resulted in catastrophic losses of between $15 billion and $20 billion for the insurance industry.

Catastrophic losses have increased in recent years, significantly eroding profits across the industry, due to substantial payouts related to widespread property damage, business interruption and liability claims.

It can often take weeks after such events to arrive at a more accurate figure for insured losses as claims are filed and assessed. UBS said it expects the bulk of insured losses from the latest storm to come from commercial properties, followed by homeowners and personal autos.

Commercial property losses usually occur when extreme cold damages buildings and disrupts business operations, including frozen pipes, roof damage and extended power outages. Personal auto claims are also increasing as icy roads and poor visibility lead to accidents and vehicle damage.