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Property Damage

Heaven & Hail: Hail Insight and the Damage it Brings

Dr. Thomas Jeffery and Matt Van Every | Insurance Journal
October 30, 2014

Hail Damage by the Numbers

Damage from convective storms continues to capture the attention of both the public and insurers because of the increase in the number of extreme weather events coupled with the shift in geographic distribution of losses. Convective storms produce strong winds and battering hail that can also generate tornadoes and heavy rains with localized flooding. According to the National Oceanic and Atmospheric Administration, hail causes about $1 billion in damage to crops and property each year; in 2013, Texas had the largest number of severe hail events, followed by Kansas, Nebraska, Oklahoma and South Dakota 1. While these areas are commonly associated with hail damage, it is important to note that any location that experiences convective storms will eventually be exposed to hail damage.

Consider the significant hail storm that swept through Denton, Texas (approximately 40 miles north of the Dallas-Fort Worth metro area 2)and the surrounding area on April 3, 2014. The storm brought high winds reaching up to 82 miles per hour and damaging hail ranging from penny to baseball in size 3. Initial reports by the Insurance Council of Texas indicated a total damage estimate of $300 million in insured losses, which included damage to both automobiles and buildings4. The original estimate was later revised upward to $500 million in total damage5. It is estimated that approximately 35,000 automobiles and 22,000 homes were damaged5.

Map1
Map 1: Preview of CoreLogic wind speed map for Denton, Texas.
Source: CoreLogic 2014.

Property-Specific Weather Analytics & Verification

Today, weather verification technologies and parcel-level data sets enable the insurance industry to better assess potential storm damage, identify impacted policyholders and develop action plans—even before the first claims come in. Insurance carriers who implement these action plans experience faster claims handling, less resource requirements and improved customer satisfaction throughout the claims process. This allows policyholders to return to their uninterrupted lives more swiftly and also reduces the desire to switch insurance providers. In a Dallas News article, “New Technology is Changing How Insurers Investigate Hail Claims,” Robb Waldner, a claims manager for Amica Mutual Insurance Company, said the following about hail maps: “We can put a game plan together even before the claims come in to predict where a hailstorm may have caused damage to Amica policyholders. Our adjusters can see twice as many claims as before.”

CASE STUDY: April 3 2014 Denton, Texas Hail Storms

A graphic overview of Denton County (Map 1) reveals that the area most heavily affected —with the largest hail—was north Denton. This geographical area received hail that was at least three inches in diameter.
Map2
Map 2: Hail size map for north side of Denton, Texas with ParcelPoint® data overlaid.
Source: CoreLogic 2014.

For hail verification in this case study, CoreLogic ® used HailPaths™, a fully-automated, proprietary model that allows carriers to react quickly and intelligently after a hail storm. This hail verification model combines proprietary hail size algorithms, state-of-the-science artificial intelligence, 3-D storm models, and the best available remote sensing and point-specific weather data to objectively determine what hail size affected each distinct parcel.

From the hail verification map, the staff of Ph.D.-level scientists then evaluated the storm paths, hail size and ParcelPoint® property data locations affected by the storms. They identified a total of 57,522 homes located in the storm’s footprint, which had the potential to be damaged by hail one inch in diameter or larger (Table 1). By using these datasets, CoreLogic estimated that the April 3rd storm caused approximately $460 million in damages; in line with the Insurance Council of Texas storm impact upgrade previously mentioned.

Hail Size (Inches) # of Homes % of Total Homes Est. Damage ($)
1 – 1.49 27,061 47.0 216,488,000
1.5 – 1.99 21,426 37.3 171,408,000
2.0 – 2.49 3,474 6.0 27,792,000
2.5 – 2.99 3,039 5.3 24,312,000
3.0 + 2,522 4.4 20,176,000
Totals 57,522 460,176,000

Table 1: Denton, Texas Hail Analysis from April 3, 2014 Storms.
Source: CoreLogic 2014.

A closer look at the total number of homes that were affected by hail damage (Table 1) reveals that nearly half of them (47 percent) were located in areas receiving hail smaller than one-and-a-half inches in diameter. The vast majority of the remaining 30,000 homes (37.3 percent) were impacted by hail that was at least one-and-a-half inches but less than two inches in diameter. A total of 15.7 percent of the homes were located in areas in which hail greater than two inches in diameter was recorded.

Many insurers don’t realize that there is accurate and reliable property-specific weather analytic and verification data available—literally at their fingertips—to help measure and better manage their storm risk and response. Companies like CoreLogic can help insurers understand weather impacts and risks to both businesses and to their customers.

SOURCE INFO:

  1. National Oceanic and Atmospheric Administration, 2014.
  2. The Weather Channel, Massive Hail Pounds Texas, Arkansas, Causes Millions in Property Damages. April 11, 2014.
  3. Fort Worth Star-Telegram, Hail, high wind hit Denton’ funnel cloud reported, April 6, 2014.
  4. Associated Press, Denton County Hailstorm Losses Put at $300 Million, April 11, 2014.
  5. Insurance Journal, Insured Loss Estimate from North Texas Storm Rises to $500m, May 2, 2014.

The content of this article is intended to provide general information and as a guide to the subject matter only. Please contact an Advise & Consult, Inc. expert for advice on your specific circumstances.

SOURCE: www.insurancejournal.com

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