Reinsurance
Product Family

Although lethal strikes are rare, hailstorms can be extremely destructive and costly. In the wake of a major hailstorm that struck Brisbane late last year, Terry Behan, Risk Consulting Property Manager for AXA XL, reviews this often-overlooked peril.

Hailstorms don't get the level of attention, or respect, given to other types of natural disasters. In the World Bank's classic publication, Natural Disaster Hotspots: A Global Risk Analysis, hailstorms aren't even included in the "interdisciplinary analysis of the location and characteristics" of natural disasters.

Localised and seldom lethal
I suspect that hailstorms don't garner as much concern as other natural disasters for two reasons. First, their impacts are typically localized. Compared to floods, tropical storms and droughts, damages from hailstorms are usually limited to relatively small areas.

Second, with the exception of a powerful hailstorm in China in 2002 that sadly killed 25 people and injured hundreds, lethal strikes are rare. The last known hail fatality in the U.S. occurred in 2000. In Australia, the Bureau of Meteorology's Severe Storms Archive has records of almost 4,400 hailstorms dating back to 1800. It lists four fatalities, although in at least two of these cases, the victims were struck by lightning, not hailstones.

Despite their low fatality rate, hailstorms can be extremely destructive … and costly:

  • July 1984, Southern Bavaria, Germany: Tennis-ball-sized hail struck Munich and surrounding areas. More than 200,000 vehicles were damaged. With insured losses around EUR 3 billion, this storm was the costliest loss event for the German insurance industry up until then.
  • October-November 2020, Brisbane, Australia: Hailstones reportedly up to 7cm (2.8in.) in diameter punctured tiled roofs and destroyed thousands of cars. Insured losses were estimated at AU 1.2 billion (USD 956 million).
  • May 2017, Denver, United States: Baseball-sized hailstones smashed into buildings and vehicles. In the most catastrophic storm ever to hit Colorado, total losses amounted to USD 2.3 billion, with insured losses of USD 1.4 billion.

What the hail?
Hailstorms are complex meteorological events, and the way they develop, advance and dissipate varies according to multiple factors, including location. This complexity and variability also make hailstorms hard to predict and challenging to prepare for (more on that later).

One meteorological condition always required to form hail is strong updrafts. As fine water droplets are carried via updrafts into altitudes where temperatures are well below 0°C (32°F), they freeze on contact with particulates in the atmosphere, then begin to grow as they collide with other super-cooled droplets. Once this frozen agglomerate reaches a diameter of more than 5mm (0.2in.), it is classified as a hailstone.

Not surprisingly, longer-lived hailstorms produce larger hailstones as the agglomerates are held aloft longer by stronger and stronger updrafts. This cyclic process within the atmosphere also creates the onion-like layers of opaque and clear ice visible within hailstones, as well as their irregular shapes.

When hailstones ultimately plunge to earth, they land within localized strips referred to as hail swaths. A swath can be limited to one industrial site or extend across an area as large as 500km (300 miles) long. Compared to cyclones and hurricanes, hailstorms are relatively brief; their duration varies from a few minutes to around an hour-and-a-half. While the ground coverage of hailstones is usually light, depths up to 45cm (18in.) have been recorded.

The resulting destruction, if any, depends on the hailstones' size, shape and velocity on impact, plus the number of hailstones per unit area. Hail risk is a combination of these factors, along with the frequency of hailstorms in a particular locale. Areas where hailstorm risk is greatest include:

  • The Great Plains region of the U.S., extending to some parts of the East Coast;
  • Eastern Australia;
  • Southern and Central Europe;
  • Much of North Asia, including large parts of China, South Korea and Japan; and
  • Much of Mexico and some parts of Central America.

More notice?
Coping with hailstorms is especially challenging because, until recently, they were difficult to forecast due to the precise storm conditions that produce hailstones being poorly understood. Thus, it's been virtually impossible for farmers and car dealers—two occupancies where hail risk is particularly acute—to take preventive measures. Or, as the former U.S. President Lyndon B. Johnson once put it: "Being president is like being a jackass in a hailstorm. There's nothing to do but stand there and take it".

That could be changing. Building on previous work focussed on tornadoes, researchers in the U.S. have created models for predicting hailstorms up to three weeks before they occur. These models are currently less helpful in pinpointing the exact locations and extents of hail swaths that far in advance. However, as more data is collected and our understanding of hailstorm dynamics evolves, researchers expect to be able to determine where hailstorms are likely to strike at least several hours to more than a day in advance. Although that is a small window, it could still make a big difference in limiting losses to high-value crops like fruits and berries (including vineyards) or expensive vehicles clustered together at car dealerships.

Risk management considerations
Although hail is rarely mentioned in international building codes, the U.S. National Fire Protection Association's "Building Construction and Safety Code" (NFPA 5000) indicates what class of building material—based on impact resistance—is needed in places subject to either "moderate" or "severe" hail risk (these parameters are defined in the Code). Major testing/certification organizations in the U.S.—ASTM, FM and UL— have also developed several test standards for assessing the impact resistance of different materials.

In Europe, impact resistance testing is mainly confined to roof membranes and solar panels.

In addition to selecting hail-resistant materials for roofing, sidings and skylights, companies operating in hail-prone regions can also lessen their risks by taking these actions:

  • Avoid storing high-value equipment and materials susceptible to water damage beneath roofs, skylights and windows that could be smashed by hail.
  • Protect roof-mounted equipment like antennas and heating/cooling systems with steel- mesh hail guards, or enclose them. Note that the fin coils of air conditioning equipment are particularly susceptible to hail damage.
  • Design roof drainage systems so that hail blockages won't produce ponding and roof collapse or cause gutters to overflow, leading to internal water damage.
  • Include hail in emergency response plans, and inspect the roof and drainage systems immediately after a storm.
  • Protect vehicles and aircraft with hail netting or mats.

Hail may not get as much attention as other natural perils, but it is hardly a new or novel risk. For instance, hail insurance was the first type of crop insurance to be offered more than a century ago and is now a well-established market in many countries worldwide. Today, risk engineering consultants, myself included, can provide guidance on minimizing possible losses.

Finally, parametric coverages are emerging as alternatives to the indemnity policies that traditionally have been used to mitigate hail risk. For example, a car dealer in a high-risk hail zone can now install a specialized weather station for measuring hail on the site and structure a policy that is triggered when agreed threshold values are reached. One of the key benefits of this approach is that the payouts are fast and certain, both critical needs for businesses looking to recover after a powerful storm.

Terry is a Risk Consulting Property Manager with AXA XL. Terry has been involved in property loss prevention and control for most of his 40 years of industry experience, mostly centred on the APAC region. His roles have included field engineering, field team management, account management and more recently, development of probabilistic risk assessment tools and other project work. He is based in Sydney and can be contacted at terrence.behan@axaxl.com

 
Subscribe

More Articles

Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.