Insurers Face Death by a Thousand Paper Cuts from Successive Hail Events

With Loss Events from Tornadoes and Severe Convective Storms Proceeding at Record Pace, New Solutions Alert Insurers of Potential Impacts to Their Portfolios

As they reviewed the impact of various weather events on their property risk portfolios in 2023, an alarming number of insurers reported being absolutely crushed by the impact of hailstorms.

Although there wasn’t any singular hail event last year that made headlines, the insurers likened their experience to a “death by 1000 papercuts” – in other words, an abnormally high frequency of events with enough severity to cause a significant amount of damage over and over, again.

Nonetheless, in 2023 several hail events were quite severe, with large hail (2 inches or larger) striking different parts of the U.S. on 141 days, the highest number for any year in decades.

Losses from these events affected not only personal lines/residential insurers which typically see the greatest impact from hail, but commercial insurers also had significant hail-related losses last year as well.

In fact, the unprecedented number of individual hail events in 2023 caused insured losses on par with those resulting from a major hurricane. Even though hurricanes typically represent the costliest loss events for insurers, especially in years when multiple storms make landfall, the higher frequency of hailstorms makes it hard to continue regarding them as a “secondary” peril.

If the losses of 2023 are any indication of potential hail damage in the future, underwriters and claim professionals should take steps to make sure they have an accurate assessment of their potential risk, including:

• Understanding more about buildings, themselves, pre-existing rooftop damages, and more will prove to be imperative if the risk from hail continues to increase in frequency and severity. EigenRisk partner, Canopy Weather, provides tools and resources to make historical hail damage assessments about the status of individual properties.
• Recognizing that the continued proliferation of housing and development in areas prone to hail is also exacerbating the potential exposure given the higher concentration of properties vulnerable to hail events.
• Gaining a more complete understanding of their existing exposure of insured assets in hail-prone areas before taking on new risks there.

Leveraging Next-Generation Event Response Platforms to Assess and Manage Hail Exposures  

The next generation of catastrophe event planning and response platforms give insurers the ability to understand which properties in their risk portfolios are vulnerable to hail events or have been affected by a hailstorm or other severe convective storm.

With their portfolios and values uploaded onto the platform, insurers can receive timely alerts only when their insureds are impacted. They no longer need to worry about doing and redoing all this work each time a storm occurs (which could be thousands of times per hail season).

With this function outsourced they’ll be notified if there has been an exposure. They can also arrange to be alerted of approaching storms and vulnerabilities based on their own triggers and thresholds.

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Learn how your underwriting and claims teams can benefit from the power and versatility of new catastrophe event platforms and eliminate the potential for “death from a thousand cuts,”.