Impact of Winter Storms Fern and Nor’easter on U.S. Insurance

Winter Storms Fern and Nor’easter: Impact on U.S. Insurance Carriers

During late January, Winter Storm Fern significantly impacted the United States and parts of Canada, leading to over 24,500 insurance claims reported by major U.S. carriers. State Farm received over 19,500 claims for property and auto damages resulting from snow, ice, wind, and frozen pipes. USAA reported more than 5,000 claims from both Winter Storm Fern and a subsequent nor’easter, illustrating how compounded weather events exacerbate loss scenarios for insurers and policyholders.

Heavy snowfall from the second storm further affected regions in the Carolinas, Virginia, Tennessee, and parts of Atlantic Canada. This exacerbation underscores the challenges of risk management when successive storms compound initial disruptions.

Significant Early-Year Losses

Karen Clark & Company (KCC) estimated insured losses from Fern at around $6.7 billion, affecting over 30 U.S. states. In contrast, Verisk's catastrophe and risk solutions group suggested potential losses, including property and automobile claims, of up to $4 billion. Insurer Aon reported that these storms have already caused at least $1 billion in insured losses.

Such events, early in the year, are critical for carriers and reinsurers to monitor. They assess potential impacts on their 2026 catastrophe budgets and retention levels ahead of peak hurricane seasons. Recent years show secondary perils like flooding and severe thunderstorms significantly contributing to global losses, rivaling traditional catastrophes.

Implications for Underwriting and Pricing

The widespread reach of Fern, impacting usually mild states, suggests that carriers may need to reevaluate underwriting criteria. This reconsideration is vital for managing freeze and water-damage risks in older properties with vulnerable plumbing. Carriers might need to reexamine regional hazard patterns due to frequent winter storms that challenge historical temperature and snowfall models.

In pricing, the frequency of claims related to winter-specific damages is likely to sustain pressure for rate adjustments in affected states, despite some market softening in other property and casualty lines.

Reinsurance and Regional Exposure

Leading carriers such as State Farm and USAA are expected to manage a considerable share of the claims from Fern. However, regional and single-state insurers in the hardest-hit areas might face concentrated financial pressures, especially when repeated events reduce retention and aggregate protections, rather than activating large-scale reinsurance recoveries.

Operational Challenges and Agent Preparedness

The combination of property and auto damages from Fern presents operational challenges for insurers. These storms test their surge capacity, digital claims processing capabilities, and repair networks. For brokers and agents, these events highlight the importance of client engagement regarding winter preparedness and coverage adequacy. Discussions should cover mitigation strategies, deductible settings, and the benefits of telematics or usage-based insurance programs for drivers facing adverse conditions.