Severe hailstorms that scientists believe may be driven by climate change, coupled with rising populations in areas prone to violent weather, pummeled insurers during the first half of 2023.
A series of destructive thunderstorms in the US racked up $34 billion in insurance losses, according to Swiss Re AG, which tracks the cost of natural disasters. Almost all losses resulted from hail damage. In all, the US accounted for as much as 68% of all global natural catastrophe losses through the end of June, the insurance company said in an Aug. 9 report.
Hail is a frequent component of thunderstorms, which are known as "secondary perils" by insurers because they are typically less severe than hurricanes and other catastrophes. Still, damages from such lesser events are trending up as more people move to areas where hail is common, according to Erdem Karaca, the Americas head of catastrophe perils for Swiss Re.
Scientists believe that climate change may also be increasing the size of the icy stones, but they caution that more research is needed.
"A warmer atmosphere can hold more moisture in the atmosphere [that] combined with higher temperatures make the atmosphere more unstable and therefore more prone to forming thunderstorms — with strong updrafts that can support the development of larger hailstones," Tim Raupach, a professor at University of New South Wales' Climate Research Centre, told S&P Global Commodity Insights in an email.
Raupach co-authored a 2021 study published in the online journal Nature Reviews Earth and Environment that explored the connection between warmer temperatures and larger hail. Small hailstones are more likely to melt in a warmer atmosphere, which means only the large ones hit the Earth, the report said.
"These factors combined lead to the general expectation that surface hail frequency may reduce overall, but when hail does reach the surface the hailstone size may be larger," Raupach wrote.
The UN's Intergovernmental Panel on Climate Change also wrote in a 2021 science report that the hail season appears to begin earlier "with increases in the frequency of large hail in broad areas over the USA."
"Since 2008, we haven't had a single year with less than $10 billion in losses from convective storms, and in the past four years we have often been over $20 billion," John Allen, a meteorologist and climate scientist with Central Michigan University who also researches hail, said in an interview. "This year [the US] had hail that aligned with a lot of urban centers where it hits new vehicles or photovoltaic installations that become a significant loss."
Much of US conducive to hail
The US is already prone to thunderstorms because of its geography. Unlike in Europe, where the Alps keep hot air from the south and cold air from the north apart, air masses can collide in the open over the Midwest and Great Plains to create destructive tornados and hailstorms, Karaca wrote.
Insurance losses are also increasing as more people move into areas vulnerable to hail and thunderstorms. Texas, which accounted for most of the losses during the first half of 2023, saw its population grow 40% over the past 20 years. The population growth in the rest of the country was less than half that, Karaca observed.
The National Oceanic and Atmospheric Administration (NOAA) released separate data Aug. 8 showing that 15 individual weather and climate disaster events costing $1 billion or more in overall damages occurred in the US between January and July, including three hail events. It was the highest number of billion-dollar events ever recorded for the first seven months of a year.
More disasters could be added to NOAA's tally before the year is over. The agency's Climate Prediction Center on Aug. 10 upgraded its Atlantic hurricane season forecast to "above normal," citing record-warm sea surface temperatures that boost such storms. The agency now predicts that six-11 hurricanes could form in the Atlantic Ocean by the time the season ends Nov. 30.
"The atmosphere is getting warmer and more humid, and that's more fuel for the storms," Carl Schreck, a weather scientist at North Carolina State University, said in an interview.
Wildfires in California and extreme storms in Florida have already prompted several insurers to halt or limit their homeowner insurance policies in those states because of rising business costs. Swiss Re said nations must rethink how and where they develop.
"Land use planning in more exposed coastal and riverine areas and urban sprawl into the wilderness generate a hard-to-revert combination of high-value exposure in higher risk environments," Jérôme Jean Haegeli, Swiss Re's chief economist, said in a statement. "Protective measures need to be taken for insurance products to remain economical for such properties at high risk."
Globally, insured losses for the first half of the year came to $50 billion, Swiss Re said.
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