A Rising Storm: Severe Convective Storms and The Impact of Growing Hail Claims
Hailstorms, notorious for wreaking havoc on the built environment, are causing a growing amount of damage and insured losses each year. With hail claims accounting for a significant proportion of thunderstorm-related losses, insurance carriers are struggling to grapple with this increasingly costly challenge. In this post, we’ll delve deeper into the alarming statistics surrounding hail claims, shedding light on why insurance carriers urgently need new and innovative solutions to tackle this escalating problem.
Hail’s Impact on Insurance Carriers
Hailstorms inflict a staggering 50-80% of thunderstorm-related losses annually. In 2022, the United States experienced insured losses exceeding $20 billion due to hail alone. According to Swiss Re, severe convective storms have resulted in a whopping $34 billion in losses in in just the first half of 2023. Last year, the largest property insurer in the United States, State Farm, suffered losses amounting to a staggering $3.5 billion due to hail events—83% of these losses resulted from home damage. This was an increase of more than $1 billion from the previous year, due to both an increase in hail claims (45,000 more claims in 2022 compared to 2021) and inflation (the average claim increased by $2,000).
This data emphasizes the critical role insurance carriers play in protecting homeowners from the financial burden imposed by hail damage and the strain that protection is causing for carriers due to stronger, more frequent convective storms and growing reconstruction costs.
The Home’s Achilles’ Heel: Roof Vulnerability to Hail Damage
Roofs, in particular, stand as the most exposed and vulnerable part of any structure during hailstorms. The severity of hail damage and subsequent repair costs vary based on multiple factors such as roofing materials, composition, and the roof’s previous experience with hail.
Diverse roofing materials react differently to hail impacts. For instance, asphalt shingles often suffer from granule loss, cracking, or punctures. Metal roofs, while more resilient, can still incur dents and dings under severe hailstorms. In addition to material type, roofs that have previously weathered hail events may experience degraded performance, making them more susceptible to future damage.
Understanding these nuances is crucial for insurance carriers when evaluating hail claims and devising appropriate coverage strategies. The variability of hail damage risk from home to home underscores the importance of accurate, property-specific risk assessment on the part of insurance carriers.
Insurance Carriers Need Innovative Solutions for Predicting Hail Damage
There are a number of key reasons why insurance carriers must rise to the challenge presented by hail claims and adopt innovative solutions:
Curtailing Financial Losses: Hail damage poses a substantial financial burden for insurance carriers. By embracing innovative strategies, carriers can minimize losses, ensuring their stability while continuing to provide adequate coverage to policyholders.
Advanced Risk Assessment: Cutting-edge technologies and data analytics empower insurance carriers to better assess and predict the potential impact of hailstorms across different regions. Such insights inform crucial decisions like underwriting, policy pricing, and risk exposure across a book of business.
Proactive Damage Prevention: A better understanding of how particular roofing materials, roof shapes and sizes, historical weather experience, and conditions affect vulnerability to damage can inform risk mitigation and building strategies. By promoting preventive measures, insurance carriers can reduce the frequency and severity of hail damage, effectively mitigating their exposure to claims.
Fostering Public Awareness: Initiatives focused on educating homeowners and business owners can raise awareness about the importance of hail-resistant construction and the benefits of comprehensive insurance coverage. Encouraging policyholders to undertake proactive measures contributes to a more resilient society, better equipped to withstand the impact of future hailstorms.
Tackling Hail Claims with Innovative Solutions
Rising hail claims statistics and the growing threat of this peril present a stark reminder of the substantial financial burden insurance carriers face due to hail damage. Roofs, bearing the brunt of hailstorms, require closer and more regular assessments with the assistance of technology such as geospatial analytics. Through investments in cutting-edge technologies, advanced risk assessment methodologies, and proactive damage prevention measures, insurance carriers can effectively mitigate losses associated with hail damage and foster public awareness to build a more resilient housing stock that can better weather this rising storm.
Learn more about how CAPE is helping insurers navigate the mounting hail risk problem here.