Tornadoes Are Growing Threat From Population Movement (Update 1)

Updated from 111:30 a.m. ET to include comments from President Obama's address Tuesday morning.

NEW YORK ( TheStreet) -- As terrible as the tornadoes in Oklahoma on Monday were, this is not a unique event, even in the city of Moore, which is about 10 miles south of Oklahoma City.

As of 10:00 a.m. ET Tuesday, rescue workers were in the midst of a massive effort to find survivors in the rubble in Moore and other suburbs of Oklahoma City, and the Oklahoma state medical examiner's office said 24 bodies had been recovered from the wreckage, according to a Reuters report.

"Numerous neighborhoods were completely leveled," Sgt. Gary Knight of the Oklahoma City Police Department said in a telephone interview with the New York Times. "Neighborhoods just wiped clean."

Scores of injuries were reported, two schools were destroyed and the Moore Medical Center was directly hit by a tornado. The National Weather Center said on Tuesday there was a moderate risk of severe thunderstorms and its Storm Prediction Center in Norman, Okla., was "forecasting the development of tornadoes . . . large hail and damaging winds over parts of the Southern Plains and the Arkansas, Louisiana and Texas region today and tonight."

President Obama on Monday night declared Oklahoma a disaster area and authorized the federal aid through the Federal Emergency Management Agency, to the counties of Cleveland, Lincoln, McClain, Oklahoma, and Pottawatomie. FEMA is taking disaster assistance applications at its disasterassistance.gov Web site, which also includes information on where to find immediate local assistance.

The pesident addressed the nation at a 10 a.m. Tuesday press conference, outlining in particular the authorization of aid through FEMA and describing his communication with authorities in Oklahoma.

Acknowledging continuing threats of severe weather and a long road ahead for recovery for the people of Moore and other affected areas, including, "in some cases, enormous grief that has to be absorbed," the president said, "we are a nation that stands by our fellow citizens."

"We don't yet know the full extent of the damage from this week's storm, " the president said. "We don't know both the human and economic losses that may have occurred. We know that severe rumbling of bad weather through much of the country still continues and we're also preparing for hurricane season that begins next week. But, if there is hope to hold onto not just in Oklahoma but around the country it's the knowledge that the good people there in Oklahoma are better prepared for this type of storm than most. And what they can be certain of is that Americans from every corner of this country will be right there with them, opening our homes, our hearts to those in need, because we're a nation that stands with our fellow citizens as long as it takes."

At this point, none of the large property and casualty (P&C) insurance providers, including Allstate ( ALL), Travelers ( TRV), Chubb ( CB) and American International Group ( AIG), have issued press releases related to the disaster in Oklahoma.

Summary Numbers for Thunderstorm/Tornado Damage

Severe thunderstorms in the U.S., which for the purpose of insurance industry reporting include tornadoes but not hurricanes, led to $27.7 billion in economic losses during 2012, with insured losses totaling $14.9 billion, according to the Insurance Information Institute, which cites data provided by Munich Re and NatCatSERVICE.

During 2011, economic losses from U.S. thunderstorms totaled a record $46.5 billion, with insurers seeing a record $25.8 billion in losses.

During 2010, thunderstorms and tornadoes led to $13.2 billion in economic losses and $9.5 billion in insured losses.

There were 939 tornados in the U.S. during 2012, with Kansas having the highest number of 145 among states, according to National Weather Service data. After Kansas came Texas with 114 tornadoes, then Alabama with 87, Mississippi with 75 and Kentucky with 65.

As of March 6, the 2013 count for tornadoes was 133 with Tennessee in the lead with 29, followed by Texas with 17, Louisiana with 16 and Mississippi with 16.

So tornadoes are not uncommon events, in very large areas of the country.

Various reports said the large tornado that hit Moore on Monday had winds as high as 200 miles per hour. Moore was hit by a devastating tornado in May 1999, with a wind gust recorded at 302 miles per hour, causing 36 deaths.

According to a detailed study on tornado damage by Lloyd's earlier this year, the U.S. has more tornadoes than any other country. "Every year an average of 1200 tornadoes kill up to 60 people, injure 1,500 and cause at least $400m in economic damage in the US."

Major tornado events during the record year of 2011 included an outbreak in late April mainly across six Southern states, including 358 tornadoes, with 348 people killed. In Tuscaloosa County, Ala., 64 people died and 1,500 were injured from a tornado on April 27, 2011.

A tornado striking Joplin, Mo., on May 22, 2011 killed 162 people and injured 1,100, and was "the single biggest insurance event in Missouri history," according to an Insurance Institute spokesman.

Lloyd's said in its report that "As the process of urbanization continues, the chances of a tornado hitting a densely populated area increase. This is already being shown in the increase in the number of billion dollar events. The rising capacity for potential losses, such as those seen in 2011, is leading to greater take up of tornado models."

While losses from events like the superstorm Hurricane Sandy in the Northeast are staggering, according to Lloyd's, "annual aggregate losses from severe thunderstorms including tornadoes have, on average, accounted for more than half of all catastrophe losses since 1990."

"Although the reporting of annual tornado events is increasing this does not necessarily mean tornadoes are becoming more frequent," Lloyd's said in the report. "The number of tornado reports has increased by an average of 14 per year since the mid-50s. However, a large proportion of this can be attributed to population movement to rural areas and increased communication around and understanding of the nature of tornadoes."

So tornadoes are becoming a more common danger because of where people choose to live. Maybe someday there will be technological means to lower the risk of tornadoes, but with the potential for winds exceeding 300 miles per hour, there are very few safe spots for people in the path of tornadoes.

One of the long-term economic effects of the increasing threat of tornadoes is bound to be a continued and significant increase in homeowner's insurance premiums, following the pattern seen in coastal states over recent years in light of the increased threat from hurricanes.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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