The last couple of years has been marked by some very significant and damaging weather events. In the early part of 2016, we saw heavy record-breaking snowfalls in the east, oddly warm or cold seasons such as the spring and fall, and out here in the southwest, heavy volumes of freak hail storms. These storms have made a big dent in the net income of nearly every insurance company and you can bet that we may start to see some premium increases as a result.

2016 has also been a year marked by more vehicles on the road overall, and more miles are driven per vehicle which has also contributed to much of the increase in auto accident and auto body claim frequency. Some point to an economic recovery as the driver of that change. Last week we wrote about how people are buying big trucks and SUV’s again.

To date, the nation has experienced and an uptick of 3.1 percent in miles driven from May 2015 through May 2016 Some states are seeing larger increases than others, while only two states, North Dakota and Montana, saw declines.

Although not widely publicized, the impacts of record-breaking weather events in driving up auto claim counts can impact your pocket book.

Weather raises risks

First quarter 2016 financial results of U.S. property and casualty insurance companies report that the price tag for these severe weather losses forced a 26.6 percent drop in U.S. Insurance company revenue. For residents here in the Southwest, we experienced record hail in Montana, Texas, and Arizona all of which contributed to the highest first-quarter catastrophe losses in the U.S. since 1994.

Hail and Flooding damages

In April, May and June 2016, five percent of the losses in the US came as a result of flooding or hail. In 2015 the total losses for the same were only 1.2 percent.

16.5 percent of all claims increases for hail and water happened in March and April.

While most states saw the largest losses in March and April, a few states like Montana broke records when losses went from 1 percent of all losses from hail/water losses in Jan- March 2016, to 35 percent for April May and June.

Total Loss Insurance claims from weather

Across the US, 17 percent of vehicles filing claims were flagged total loss or non-repairable by mid-year across all losses. For the more common comprehensive losses, only 13 percent were flagged a total loss, while collision and liability losses saw nearly 18 percent flagged as a total loss. Each loss category group has seen about a one percentage point increase in total loss frequency so far this year versus mid-year 2015.

Significant Swings

Total loss volume in certain states also saw significant swings. For example, devastating storms in late June led to flash-flooding in West Virginia, causing damage to up to 5,500 homes, 125 businesses, and swaths of the infrastructure. Total loss valuation counts were up 62 percent for the first six months of 2016 from the same period in 2015. When comprehensive losses are excluded, however, those same counts were up only 7.8 percent.

At this point, halfway through the year, our weather has played a major role in driving up auto body repair claim counts and totaling out cars. This El Niño weather pattern has had a significant impact on weather patterns across the country. As we head into the late summer and early fall, the developing La Niña will strengthen and continue to be the main source of North American weather, and also continue strong weather events that will likely continue to spin off record-breaking weather events and will continue to damage more cars and total out more cars.

A warm fall is headed our way according to the Weather Network who predicts the warm weather pattern for the summer will persist into fall, driving up tropical storm activity in the Atlantic Basin. Seven hurricanes or tropical storms over the last 10 years have caused at least one billion dollars of damage in the U.S. Five of the seven came during the La Nina years of 2008 and 2011 according to CNN. Conversely, a strong La Nina (like we had last year) typically follows a strong El Niño, so not much relief may be in sight anytime soon. When the insurance companies suffer financial losses with the magnitude that we have witnessed in the first half of the year, you can bet that our insurance premiums are going to rise.

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