This post is part of a series sponsored by CoreLogic.
In 2023, the United States faced an unprecedented housing risk crisis, highlighted by a significant discrepancy between insurance policy prices and escalating risks from natural disasters. The increase in severe convective storm (SCS) activity, including severe thunderstorms, resulted in unprecedented levels of insured losses throughout the year, affecting millions of homes across the country.
Severe thunderstorms, characterized by straight-line winds, damaging hail and destructive tornadoes, emerged as the leading causes of insured losses in 2023. The widespread occurrence of these SCS losses, which included numerous billion-dollar incidents, was equivalent to the financial impact of a major hurricane.
Among these hazards, hail emerged as the leading cause of insurance losses and affected large parts of the United States. Unlike tornadoes and straight-line winds, hail events occur frequently and can cause significant damage. The extent of the crisis is evident in the frightening number of single- and multi-family homes affected by hail, which exceeded 10 million in the contiguous United States over the course of the year.
While hailstorms typically peak in late spring and summer, the 2023 season saw significant activity throughout the year, with large hailstones hitting over 100,000 homes on multiple occasions. CoreLogic’s weather verification technology recorded 141 days of large hail in 2023, the highest since 2003.
The impact of these storms was particularly pronounced in Texas, the Southeast, and the Plains, where densely populated areas suffered significant damage. However, not all parts of these states experienced the same increase in hail activity.
A closer look at individual events, such as the severe thunderstorm activity between June 11 and 16, 2023, illustrates the seriousness of the situation. Large hail and strong straight-line winds devastated portions of the Dallas-Fort Worth area, resulting in insured losses estimated at $7 billion to $10 billion, with hail accounting for 95% of the losses.
While climate change may play a role in exacerbating the volatility of severe weather patterns, the data suggests that changes in exposure, including growth in residential and commercial construction, are the primary cause of the escalating losses. The increase in housing units in the United States, coupled with rising construction costs, has increased the financial impact of severe convective storms.
These challenges highlight the importance of high-quality input data for effective underwriting, pricing and risk management strategies. Accurate assessments of building characteristics and real-time meteorological data are critical to improving resilience and mitigating catastrophic losses.
The CoreLogic® 2024 Severe Convective Storm Risk Report is a stark reminder to the insurance industry and policymakers, calling for proactive measures to address the evolving real estate risk landscape. By adopting data-driven approaches and fostering collaboration, stakeholders can better prepare for future challenges and protect communities from the growing threat of severe weather events.
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2024-03-20 23:16:59
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