The Massive Cost of Winter Storm Uri

Winter Storm Uri, the major winter storm of mid-February 2021, set more than 2,000 cold temperature records and blanketed a record 73% of the United States in snow, according to Air Worldwide. Beyond its record-setting scale, the storm devastated Texas and led to billions of dollars in losses.

Sources of Loss

According to Moody’s Investor Services, the last winter storm event to exceed $1 billion was Winter Storm Quinn, which hit the Northeastern U.S. in March 2018. They predict insured losses for US P&C insurers to total in the billions of dollars, with claims from homeowners, commercial property, and auto lines of business.

In Texas alone, insurers write more than $10 billion in homeowners’ coverage, according to the Texas Department of Insurance’s 2020 Annual Report. During the storm, and in its aftermath, millions of homeowners lost power and water, and experienced property damage due to snow and ice. Frozen and broken pipes further caused flooding and water damage. Depending upon specific policy coverage, these water losses inside insured buildings may potentially be addressed by homeowners and commercial property insurance.

Utility service interruption coverage, which is optional in most commercial property policies, is another possible source of business insurance claims. With parts of Texas losing power for more than four days, many utility service interruption policies have a 48 to 72-hour deductible.

Auto insurance claims also have the potential to cost insurers billions in covered losses. The Texas Department of Insurance’s 2020 Annual Report estimates that Texans have more than $23 billion in private passenger auto insurance. With icy roads and drivers unfamiliar with operating vehicles in winter weather, Texas and other southern states have seen a steep increase in auto accidents.

According to Air Worldwide, in mid-February, 39 states in the continental U.S. fell under winter weather advisories or storm alerts. The massive scale of Winter Storm Uri and its destructive power have generated billions in losses and provoked a surge in claims. Forensic accounting firms, such as SDC CPAs, can prove critical in helping insurers evaluate claims as insurers process the huge volume of losses caused by Winter Storm Uri.

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