Severe convective storms (SCS), which include thunderstorms, tornadoes, hail, and straight-line winds, are among the most frequent and destructive weather hazards in the United States. They consistently rank among the costliest perils for insurers, with the financial toll of insured losses stemming from severe convective storms in the U.S. surpassing $50 billion in 2023 alone.
This $50 billion figure holds significant weight, especially given that since 2010, only three years have seen major U.S. hurricanes resulting in insured losses exceeding this amount.
Hailstorms account for the majority of SCS losses each year, typically accounting for 50-80 percent of SCS claims. Hail significantly impacts organizations that rely on outdoor operations, such as those in renewable infrastructure and automotive sectors, as well as properties vulnerable to the elements, including airports and universities.
Given the elevated risk posed by hail, stakeholders are increasingly invested in future research.
Understanding hail exposure is becoming increasingly crucial for U.S. insurers and stakeholders in sectors susceptible to severe storm events. There is a lack of long-term, reliable observations of hail, revealing the limitations of understanding hail trends. A deep comprehension of the underlying physical processes of storms that generate especially large and destructive hailstones has historically presented a formidable challenge for researchers in the field of hail science.
What causes hail storms?
According to NOAA, hailstones form when raindrops are propelled upward by thunderstorm updrafts into extremely cold regions of the atmosphere, where they freeze. The hail begins to fall when the thunderstorm's updraft can no longer support the weight of the hailstone, either due to its size or the weakening of the updraft.
The size of hailstones can vary widely, from small pellets less than a centimeter in diameter to large chunks exceeding the size of baseballs. Even relatively small hailstones have the potential to inflict significant damage to crops, while larger ones can shatter and dent vehicles or render solar panels inoperable. Moreover, the intensity of hailstorms adds another layer of complexity, referring to the energy released by hailstones during falling in a hailstorm. Higher intensity hailstorms often involve larger, and/or denser hailstones falling at greater speeds, which can result in more severe damage.
Harnessing the latest advancements in climatology, hail research is improving.
With the staggering billions of dollars in damage incurred each year in North America alone, hail and climate scientists are intensifying efforts to utilize climate reanalysis models and radar and satellite technologies for enhanced detection and mitigation of storm-related damage. Scientists are also seeking to answer questions surrounding the influence of climate change on hailstorms and the processes within a storm that affect the intensity and size of hail.
Recent studies are focused on regions with significant hail occurrences, and reliable data, including Europe, the United States, and Australia, leveraging the latest in climate reanalysis data.
Research produced by Francesco Battaglioli, and others, has made significant contributions to understanding hail trends in the U.S. and Europe. Leveraging data from the ERA5 climate reanalysis spanning decades, the research highlights significant increases of lightning and hail across most of Europe, primarily due to rising low-level moisture (November, 2023). Across North America the study found comparatively small trends, apart from isolated significant increases in the Rocky Mountains and Canadian plains.
Another study, also authored by Battaglioli and collaborators discovered that using a machine learning model with climate reanalysis data can lead to very accurate forecasts for hail and lighting in Europe within a medium timeframe (November, 2023). This finding could improve our knowledge of when hail happens and lead to better forecasting. Even a short term forecast can assist in mitigating damage to both people and assets, offering time to seek protection against the risk of falling hail.
In Australia, a new study looked at hail patterns across the country. The research revealed an increase in annual hail-prone days in major cities like Sydney, Perth, Canberra, and Hobart, but a decrease in the rest of Australia (September, 2023). The authors attribute these changes to shifts in atmospheric instability over the past 30 years. However, there's still no scientific consensus on how exactly climate change affects hail patterns. While this study shows promise, additional research is needed to confirm its findings and advance our understanding of hail dynamics.
Increased research means better insurance models
While the impact of climate change on hail remains subject to scientific debate, advancements in forecasting hail hold substantial implications for improving insurance products. Enhanced research enables the development of more precise parametric insurance products tailored to clients' specific hail exposure and needs. Furthermore, it facilitates swift payouts in the event of a hailstorm and ensures timely support for affected individuals and businesses.
Our expertise in hail modeling
At Descartes, our underwriters and data scientists utilize a hazard module to calculate the probability of an event occurring for the policyholder for the peril of hail. Our model takes into account a combination of data sources, gathering historical hail event data from ground reports (sensors, databases, etc.), radar and satellite imagery, and climate reanalysis models. This data is used to produce anywhere from 10,000 to 100,000 stochastic physics-based simulations, thanks to Open Data (via API) and HPC resources, each representing a potential upcoming year of hail storms in a specific geographic area. We also leverage the latest techniques in AI to bridge the gap between radar data and ground observations of hail, facilitating more accurate risk assessment and pricing of risk for clients.
Through this process, Descartes is able to generate an extensive array of potential scenarios through an in-house model that produces outputs on potential real hail events. Our specialized expertise enables us to provide capacity for corporations operating in high-risk areas, even when other insurers have withdrawn from the market entirely. Through providing the most accurate assessment of risk, we are able to align seamlessly with a client’s unique risk profile and financial parameters.
