U.S. Freeze Costs $3.5 Billion Including Travel Delays, Aon Says

Feb 06, 2014 1:42 pm ET

Feb. 6 (Bloomberg) -- Winter storms that brought heavy snowfall, freezing rain and Arctic air to the U.S. last month will probably cost more than $3.5 billion in economic losses, according to insurance broker Aon Plc.

Insurers estimated losses of more than $1.4 billion from the second week of January, the most costly of four extreme- weather periods during the month, the London-based broker said today in a report. Insured losses from the three other stretches totaled about $200 million.

At least 21 people were killed from Jan. 5 through 8, as more than 20 inches (51 centimeters) of snow fell in the Great Lakes region and Ohio Valley and freezing rain pelted the Northeast and Mid-Atlantic. Widespread property damage and severe travel delays added to the costs.

“The combination of physical damages and business- interruption costs have quickly aggregated into direct economic losses well into the billions of dollars,” Steve Bowen, a senior scientist at Aon’s forecasting unit, said in a statement. He said this is the costliest year for “winter weather peril” since 2011.

Freezing weather is already leading to claims at insurers, including many tied to frozen pipes that burst, said Dino Robusto, executive vice president at Chubb Corp. Storms from Jan. 3 to Jan. 8 could cost Chubb as much as $200 million before tax, the company said last month. Tom Wilson, chief executive officer of Allstate Corp., said the largest publicly traded U.S. auto and home insurer would report costs if they exceeded $150 million in a month.

Damage reports from a storm that hit the central and eastern U.S. from Jan. 20 to Jan. 22 were mostly caused by burst pipes, downed trees and power lines and hundreds of traffic accidents, Aon said. At the end of the month, the weather paralyzed travel in several southeastern states and particularly the city of Atlanta.

--Editors: Dan Reichl, Dan Kraut