New analysis by the Insurance Institute for Business & Home Safety (IBHS) and ZestyAI, a climate and property risk analytics provider, finds property/casualty insurance carriers need to broaden their datasets when accounting for the cumulative effect all hailstorms have on a roof’s susceptibility to damage over time.

Historically, carriers focused on intense catastrophic weather events to predict hail risk, with supporting data confined to storms with hailstones larger than one or two inches. The study, “Small Hail, Big Problems, New Approach,” considers the data related to smaller hailstone impacts, likely responsible for 99 percent of the impacts on a roof from a hailstorm. The analysis found high concentrations of small hail are more important than previously thought.

Hail risk is especially costly to insurers because unlike other catastrophic perils like hurricanes and wildfires, it can be difficult to identify the storm that caused a hail claim, often forcing insurance carriers to raise overall premiums or add high deductibles to compensate for added costs.

The research found that all hail events needs to be accounted for during modeling to better understand losses. “Using data from all hail events, not just those with hail that meet the severe criteria of one inch or greater, allows carriers to consider valuable data on smaller hailstone impacts,” the report stated. Researchers suggest insurers can integrate climate and materials science to better understand hail frequency and severity.

“As we’ve learned more about hailstorms, we’ve discovered storms that produce large concentrations of small hail are more common than we thought, and despite causing less individual damage than a single large hailstone, small hail, especially in high concentrations, is likely a meaningful contributor to the loss we see each year from hail,” said Dr. Ian Giammanco, managing director of standards and data analytics at IBHS. “Experiments also show large concentrations of smaller hailstones cause degradation to the asphalt shingles, specifically dislodging large amounts of granules. Once enough granules are lost, the underlying asphalt material can become more susceptible to aging and weathering. Repeated exposure to these types of hailstorms can shorten the life of an asphalt shingle roof and increase the damage caused by large hailstones in the next storm.”

If insurers enhance their modeling dataset to include smaller hail events, their analysis could be as much as 58 times more accurate than looking at events with large and very large maximum hail sizes alone, the report stated. The resulting benefits would lead to better hail risk assessments, improved underwriting, as well as opening up ratings to previously avoided areas.

“Hail losses are a persistent problem for property insurers’ risk management efforts,” said Attila Toth, founder and CEO of ZestyAI. “Three of the nation’s five largest publicly-traded P&C carriers mentioned hail as a key concern in 2022 financial reports. Greater losses have brought attention to hail risk, and the insurance industry needs better approaches to solve this problem.”

The full report is available on IBHS’s website.