Hailstorms on track to again cause over $10 billion in insured losses in 2018Posted On: Aug. 14, 2018 2:25 PM CST
Hailstorm insured losses in the U.S. will likely exceed the $10 billion mark for the 11th consecutive year in 2018, experts say.
Hailstorms represent 70% of the average annual property losses from severe convective storms in the United States, according to the National Center for Atmospheric Research, which is hosting the inaugural North American Workshop on Hail and Hailstorms in Boulder, Colorado, this week.
“We all know hail is extremely damaging, but few people actually understand that it’s about 70% of the piece of the pie when it comes to the annual amount of damage produced by severe thunderstorms each year,” Ian Giammanco, lead research meteorologist with the Insurance Institute for Business & Home Safety based in Charlotte, North Carolina, and co-chair of the workshop, said during a webinar on Tuesday. “It’s the Rodney Dangerfield of perils. It just doesn’t get any respect.”
“It’s just a huge driver of the dollar losses each year,” he added.
In contrast, 20% of insured losses are caused by tornados and straight-line winds, while 10% are caused by lightning, Mr. Giammanco said, citing data from catastrophe modeler Risk Management Solutions Inc.
“It looks like 2018 will probably become the 11th straight year in which total dollar losses exceed $10 billion from severe storms, and most of that is hail,” he said.
The property/casualty insurance sector will have to take steps to adjust its business model based on the future impact of hailstorms, Mr. Giammanco said.
“Each company will have to decide how they want to tackle the hail hazard in their own business decisions,” he said. “As science improves — and we’re all here together in Boulder to talk about ‘Can we get a better picture of hail risk? Can we even get to the point where we’re doing seasonal hail forecasts?’ — that enables the financial markets to actually develop those risk transfer tools. You look at hurricanes, and the reinsurance market is very large and very robust for tropical cyclones because it has a lot of science behind it. We’re just not there yet in severe storms. It’s a much smaller phenomenon. It’s harder to simulate. But as we improve that picture of risk and understanding, it will open the door to those financial tools to try to transfer some of that risk.”
A 2017 hailstorm just northwest of Denver caused $2.3 billion in insurance claims, noted Andrew Heymsfield, senior scientist for the center and co-chair of the workshop.
“It’s an extremely prevalent problem here,” he said.
“You can get hail almost everywhere in the United States,” but the central United States and the Denver area are typical hot spots in the country, said Andreas Prein, project scientist for the center.
Argentina is one of the hotspots at the global level with the largest frequency of large hail in the world, said Kristen Rasmussen, assistant professor in the Department of Atmospheric Science at Colorado State University in Fort Collins, which will be conducting a major field study funded by the National Science Foundation and the U.S. Department of Energy this fall to study severe convective storms in the region.
“Hail is not just a thing that we’re worried about in the United States,” she said. “It’s actually something people around the world are worried about.”
“Hailstorms have a global impact, so we have a critical need to understand how they may change in the future climate,” she added.