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Severe convective storms are a growing threat to insurers, driving up losses and requiring advanced modeling, mitigation and policy strategies to manage their financial impact.
Published on April 9, 2025
By Lorenzo Whitehurst
Director Global Underwriting Risk Management & Business Analysis4-minute read
Property insurers have traditionally focused profit/loss predictive modeling and risk mitigation efforts on primary perils, such as hurricanes, earthquakes and wildfires. And yet, secondary perils—namely severe convective storms (SCS) such as hail or damaging winds—pose a growing risk, often leading to greater losses than even primary perils.
Severe convective storms are responsible for substantial losses across commercial property, agriculture, auto, home and marine lines. In fact, 70% of global insured losses were driven by SCS in recent years.1 Why? Over the past two decades, population shifts to metropolitan and suburban areas, climate change, a rise in property costs and inflation have all fueled the frequency and severity of SCS impact, contributing to a rise in recorded losses.2
Convective storms have always impacted the insurance industry but were a small portion of the total insured property loss annually prior to the 2000s. Today, all secondary perils were responsible for 65% of global insured natural catastrophe losses in 2024.3 SCS caused almost 50% of those damages.4
Given the gradual increase of SCS events with severe insured damages annually, for the companies that did not react soon enough to the increasing trend, their property loss ratios would have been disproportionally impacted by the subtle adverse shift in the SCS loss landscape. Therefore, it’s critical that the insurance industry continues to shift to the perspective that all perils should be seen as primary perils.
Severe convective storms are the silent but deadly drivers of rising insured losses, often outpacing even hurricanes and wildfires.
Hail: A sneaky and dangerous culprit
Hail is responsible for 70% of annual SCS losses, while wind and tornadoes account for 20% and lightning accounts for 10%.5 Hailstorms are common and can occur with little warning, causing extensive damage to properties, vehicles and crops.
The Great Plains region is more prone to hailstorms than other areas of the country. Hail Alley, located where Nebraska, Colorado and Wyoming meet, experiences an average of seven to nine hail days per year.6 Other states, such as Texas, Colorado, Kansas and Oklahoma, are also at high risk. Insurers with a concentration of policies in these areas are particularly vulnerable to hail-related losses.
An increase in hail damage claims, paired with growing material and labor repair costs,7 means SCS weather events create a perfect storm:
Hail causes damage that drives up repair costs. Hail can cause significant damage to roofs, siding, windows and vehicles that can be costly to repair.
Hailstorms can cause spikes in claims that impact the combined ratio. A high frequency of hailstorms can quickly aggregate to significant annual incurred losses.
Recently, property catastrophe reinsurance has become more limited—it often doesn’t cover frequent smaller events or it costs much more to do so. This means if hail risk isn’t priced correctly or if too much exposure is concentrated in one area, insurers could face big losses. Without strong backup protection, this can reduce profitability and even push the combined ratio of expenses to premiums above 100%, eliminating an insurer’s underwriting profitability.
Hail has a long-term financial impact on insurers and policyholders. Hail-related damages can strain an insurer’s financial resources while driving up future premiums for policyholders in high-risk areas.
Property damage from severe convective storm type:
70% hail
20% wind and tornadoes
10% lightning
The path to clearer skies ahead
Proactive efforts are needed to navigate and overcome the obstacles that SCS create for insurers, brokers and policyholders:
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Modeling and technology
Unlike the measurable and immediate damage caused by a hurricane or wildfire, SCS damages often develop over time. A roof may endure multiple hail events, for example, before it shows enough signs of damage to result in an insurance claim.What can be done? Some insurers are exploring the use of artificial intelligence (AI) and machine learning to model SCS more accurately, assessing multiple complex variables to produce hail scores that better inform premium amounts for policyholders.8
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Risk mitigation
The unpredictable nature of SCS makes it challenging to manage and mitigate these risks effectively. While certain protective measures can reduce damage, they are not guaranteed.What can be done? Advising policyholders to upgrade their roofs to impact-resistant roof shingles will better protect them against hail and other SCS-related damages.9
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Coverage and products customization
The cumulative damages resulting from the increase in SCS frequency and severity can lead to increased claims expenses and substantial insurer payouts.What can be done? Some insurers are responding with coverage exclusions for cosmetic versus functional damage to property to help mitigate losses. Others are customizing products based on a policyholder’s potential for hail damage or increasing premiums in high-risk areas.
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Portfolio Management
Although convective storms geographically impact the majority of America, there are certain areas, such as Hail Alley in the Midwest and others, that have a heightened risk. Aggregating insured exposures in those high-risk regions without accounting for this excess risk can lead to significant and unexpected losses.What can be done? Insurance companies can develop portfolio management strategies to minimize their loss aggregation risk. This includes building a consistent view of the SCS hazard that can be applied and captured at the point of sale and used to build a portfolio view of the risk. In addition to risk-adjusted pricing, portfolio management tools can inform on guidance and risk tolerances that can be set to help manage and minimize the impact of losses due to SCS.
If the growing risk of severe convective storms is not mitigated, they will continue driving higher insurance losses. Insurers, brokers and policyholders who understand the SCS landscape, adapt more comprehensive models and implement proactive loss mitigation strategies may be better positioned to manage and protect against these losses.
1AON. “Rising losses from severe convective storms mostly explained by exposure growth,” September 11, 2023.
2Gallager Re “Severe Connective Storms: Decoding the Dynamics,” Accessed April 7, 2025.
3Insurance Insider “Secondary perils drive global cat losses towards ‘new normal’ of $150bn in 2024,” January 30, 2025.
4Insurance Information Institute “Facts + Statistics: U.S. Catastrophes,” Accessed March 30, 2025.
5NAIC “Severe Convective Storms,” Accessed March 30, 2025.
6NOAA National Severe Storms Laboratory “Severe Weather 101 – Hail,” Accessed March 30, 2025.
7The New York Times “Insurers Report Rising Hail Damage Claims,” March 22, 2024.
8Insurance Journal “Catastrophe Experts Tap AI to Tackle Soaring Insured Losses,” March 26, 2025.
9Insurance Institute for Business & Home Safety “Impact - Resistant Shingle Performance Ratings,” June 2023.