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‘Major Tornado Outbreak’ in Midwest Adding to Insurance Losses

May 25 (Bloomberg) -- A “major tornado outbreak” brewing across nine states in the central U.S. is adding to insured losses that may already have reached $6.5 billion this season, according to an industry group.

Tornadoes and thunderstorms have caused at least $3 billion in insured losses and perhaps more than double that, said Robert Hartwig, president and economist at the Insurance Information Institute in New York.

“It is going to be an earnings event to insurers,” Hartwig said by telephone from Iowa. “These are outsized losses.”

A tornado watch, meaning the deadly storms may develop, was posted today from Mississippi to Ohio, including the cities of Indianapolis, St. Louis, and Memphis, according to the National Weather Service.

“The potential is increasing for a major tornado outbreak,” the U.S. Storm Prediction Center said. “Widespread wind damage and large hail are also a prominent concern through the evening hours.”

Storm damage from flipped trucks, downed power lines and damaged homes has been reported in Illinois, Indiana, Kansas and Missouri, according to the storm center in Norman, Oklahoma. As of about 4 p.m. New York time, 20 tornadoes were spotted across the Midwest and “significant damage” was reported in the town of Sedalia, Missouri, the agency said.

Tornado warnings, meaning radar detected signs of a twister, were posted for a time on three sides of St. Louis.

Deadly Year

So far in 2011, tornadoes have killed 504 people, according to the center, which is investigating a total of 1,228 twister reports. Major outbreaks have damaged the St. Louis airport, flattened Tuscaloosa, Alabama, and destroyed a large part of Joplin, Missouri. In the three years prior to this year, 192 people were killed.

Hartwig said losses from thunderstorms and tornadoes have been rising since 2008. From 1990 to 2009, tornadoes caused $97.8 billion in insured U.S. losses, second only to hurricanes, responsible for losses of $152.4 billion.

“This is the fourth consecutive year thunderstorm and tornado losses are reaching record levels,” Hartwig said. He said the industry is positioned to pay the losses.

Tornadoes swept across Texas, Arkansas, Kansas and Oklahoma yesterday, killing 14 people, according to the Associated Press. Earlier this week, at least 123 people were killed by a tornado in Joplin, Missouri, the single deadliest U.S. twister on records going back to 1950.

American Airlines and its American Eagle regional carrier canceled 594 flights because of yesterday’s storms and pulled 89 planes from service for possible hail damage.

Southwest Airlines Co., based at Love Field in Dallas, said it expected to cancel or delay an undetermined number of flights as it checks eight aircraft for damage.

Winds of almost 70 miles (113 kilometers) per hour and hail as large as 4.25 inches (11 centimeters) in diameter were reported as storms moved through the Dallas area late yesterday, the National Weather Service said. About 10,000 people were stranded overnight at Dallas-Fort Worth International Airport, said David Magana, an airport spokesman.

To contact the reporters on this story: Brian K. Sullivan in Boston at

To contact the editors responsible for this story: Dan Stets at

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