A new special report from AM Best suggests that a lot of insurers and reinsurers underwriting risk in the United States could be facing difficulties when it comes to diversifying their portfolios, thanks to the growing frequency and severity of convective storms in the southern U.S. states.

Calling the scenario an evolving situation, the Best’s Commentary report, entitled Convective Storms Create Difficulties in Diversifying Portfolios, states that “insurers and reinsurers rely on geographical diversification in underwriting to maintain a stable, profitable portfolio. However, this proved more difficult in recent years given the growing number of convective storms, along with the increased intensity of these storms and the wider geographic areas where storms are occurring.” 

They add that secondary perils continue to have a more significant impact on underwriting results for property insurers. Convective storm season peaks from March, through June.

“Severe convective storms are among the most common and damaging natural catastrophes in the U.S.,” they state. Gallagher Re reported that severe convective storms were the largest contributor to global insurance and reinsurance market losses due to catastrophe events in the first quarter of 2023, generating more than $10-billion (USD) in insured losses.