Claims from severe convective storms have been tearing a hole in the returns for Bermuda’s catastrophe reinsurers but a leading authority said next-generation software was proving to be a solution.

Celebrated modeller Karen Clark said there was often a serious underestimation of SCS risks — as severe weather losses in 2024 are expected to be larger than last year.

Catastrophe models that are useful for the prediction of hurricane risks should not be used in gauging probable event scenarios for SCS, the president and chief executive of the eponymous Karen Clark & Co has said.

One of the most common and damaging natural catastrophes in the United States, severe convective storms have led to market disruption as wary reinsurance companies have become less likely to offer cover to primary writers.

In 2023, SCS were the main drivers of insured natural catastrophe losses, leading to a clamour for more emphasis on secondary perils.

A Swiss Re report has estimated $64 billion in SCS losses last year, with some $54 billion in the US alone. It is a large chunk of the global insured losses from natural disasters, estimated at $108 billion for 2023.

Ms Clark said reinsurers less prepared to take on SCS risks were simply without the right tools.

The practice of looking at SCS risks through the catastrophe models designed for hurricanes has come with unfortunate results.

Her company has been providing access to proprietary systems that provide a better understanding of SCS risks.

In an interview with The Royal Gazette, the woman who created the first catastrophe model and founded the first catastrophe modelling company in 1987, discussed the SCS problem, and the record-setting Hurricane Beryl, which has affected millions across the Caribbean, Mexico and Texas.

KCC’s initial claims forecast was that US insurers could face as much as $2.7 billion in insured losses, even though Beryl had become a weakening storm as it made landfall in Texas.

Ms Clark has been an innovator in the industry. The recognition of her leadership and contributions has included the 2007 Nobel Peace Prize for her contributions to the work of the Intergovernmental Panel on Climate Change.

KCC provides catastrophe models for other global perils, including earthquakes, extratropical cyclones, floods, tropical cyclones, wildfires and winter storms.