CoreLogic reports that severe thunderstorm activity from June 11-15 brought strong straight-line winds, record-sized hail, and tornadoes, causing substantial damage to property across the U.S. Wind speeds in excess of 100 miles per hour and hail greater than four inches in diameter were recorded in Denton County, Texas.
CoreLogic estimates that the straight-line winds and hail from June 11-15 caused between $7 billion and $10 billion in insured losses, an estimate found by CoreLogic’s weather monitoring technology, which allows for comprehensive tracking of all losses from severe convective storm events. This loss estimate includes damage to residential, commercial, and industrial property, as well as automobiles. The estimate also excludes damage to infrastructure such as roads, utilities, and governmental facilities. Hail alone is estimated to make up 95% of losses from this event, making it one of the biggest hail losses in history.
It was found that straight-line winds in excess of 60 miles per hour may have impacted more than 2.9 million homes, particularly in Florida, Missouri, and Georgia, while hail greater than one inch in diameter may have affected more than one million homes, particularly in Texas, Arkansas, and Oklahoma.
A hail storm is a vertical load that causes severe damage to roofs, walls, and openings, such as skylights, windows, and doors. According to an evaluation of property insurance claim data in Dallas-Fort Worth, written by Brown et al., 2015 and cited in CoreLogic’s U.S. Severe Convective Storm Model documentation, damage to roofs accounted for 91.7% of the total number of claims during the hail storm that prompted the study. Damage to walls, doors, and windows accounted for a combined 2.3% of the total number of claims from the same event.
Roofing material factors heavily into whether a hail storm will damage a property’s roof. According to Brown et al., 2015, asphalt shingling has a hail diameter size damage threshold of one inch, while concrete tiles have a hail diameter size threshold of two inches. Additionally, roofs can be rated for impact resistance on a scale of one to four, with roofs of a higher rating being more resistant to hail-related damage.
Integrating updated building codes and construction practices with the latest science and engineering, CoreLogic’s U.S. Severe Convective Storm Model offers unique modeling innovations including specialized hail vulnerability functions for structures and automobiles, a finite hazard footprint model that produces a robust representation of the focused and severe damages arising from tornadoes, embedded weather system modeling to simulate event occurrences of tens to hundreds of tornadoes, hail storms, and straight-line wind events spanning multiple states.
A recent report from George Gallagher, ESG, Climate Risk, Natural Hazard and Spatial Solutions from CoreLogic, and Kent David, Senior Leader, Analytics Consulting from CoreLogic, titled “The Five Biggest Challenges for Banks When it Comes to Climate Risk” analyzes current climate risks and the Federal Reserve Board review of supervised institutions such as banks that are “appropriately managing all material risks, including financial risks related to climate change.”
On January 17, 2023, the Federal Reserve launched its pilot Climate Scenario Analysis exercise (CSA) by publishing instructions for the six U.S. banking organizations that will participate. As part of the CSA, participants will submit data and documentation on climate risk management practices that banks should consider reviewing to better understand the Federal Reserve’s expectations. Five major points that the author notes related to climate risk management are as follows: Calculating physical risks in non-credit terms; lack of common terminology; financially quantifying physical risk; understanding the probability of default; and complex climate risk variables are very different from credit risk variables.