What if you could know the exact risk for storm damage on a neighbourhood level? One research company is taking a new look at tornadoes and hailstorms – and the results should prove invaluable to Canadian commercial and personal insurers.
“Can we explain what will make one part of a city more dangerous than another?” asks Kyle Beatty, senior vice president at Atmospheric and Environmental Research, a Verisk Analytics company that is spearheading the new emerging risk research program entitled Climate Change: Tornado and Hail. “That is what we are trying to do with this study – applying scientific methods to the anecdotal information we have now.”
The research will quantify any shifts in the patterns of hazard related to severe thunderstorms in North America – an initiative that is co-sponsored by a group of insurance industry and financial sector companies from both the United States and Canada.
And the information will be specific – not just examining entire cities and regions, but why one part of a city is more prone to hail damage than another, or whether the heat content of large cities augments the intensity of storms.
“In a given city, there has been an argument that there are differences – just no hard evidence to prove it,” he told InsuranceBusiness.ca. “That is the point of the study. Take Oklahoma City for example. There were two tornadoes that hit one part of the city, then a third in the same place. Statistically, that is very, very unlikely.
“From the results of this study, we may explain why these events are happening.”
Roof damage has been a major concern among personal insurers the past five years, and the data gathered will be of critical interest to Canadian insurers.
“As the non-fire perils like hail and water increasingly contribute to the total losses of a company, it puts more of an impetus on the company to investigate and learn about these claims,” says Andrew Cartmell, President and CEO of SGI CANADA. “Improved modeling and new ideas about what to model have become even more critical.”
In Saskatchewan alone, property claims from wind and hail have risen from 1,053 in 2009 to 4,209 in 2012.
“The insurance industry needs to work with other stakeholders in identifying ways to mitigate the impacts of weather-related events,” adds Cartmell.
The research is already being conducted in both Canada and the United States, with data updates provided every 90 days until the research is complete in 12 to 18 months.
“The supporters of the AER Emerging Risk research program share our strong belief that objective scientific research, when put specifically in the context of industry needs, can directly enhance business strategies,” says Beatty. “Our focus on providing actionable data to our supporters on an ongoing basis, built off the foundation of original, peer‐reviewed research, is what makes this program uniquely valuable.”