How severe storms in Texas and population growth are driving hail damage
Severe convective storms — also known as severe thunderstorms — caused tens of billions of dollars of insured losses across the U.S. in 2023.
Tornadoes, straight-line winds (including derechos) and hail are the damage-causing agents of severe thunderstorms, but it was the latter that dominated the loss landscape in 2023.
Hail of at least one inch in diameter battered more than 10 million homes across the U.S. Two million of those homes were in Texas alone.
Historically, risk managers have considered severe thunderstorms a secondary peril given the high-frequency but low-severity nature of these events. However, hail is quickly becoming an expensive peril that should be modeled with the same scrutiny as the “big ones” like hurricanes and earthquakes.
In 2023 there were 141 days with large hail (greater than two inches), which is more days than any year since 2003. Insured loss figures have also been increasing. This significant increase is the result of two interrelated factors: climate patterns and the increasing scale of homes.
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Does Changing Weather Lead to Texas-Sized Hail?
There is a direct link between a warming atmosphere and weather pattern volatility. Annual or multiannual climate phenomena, such as the shift to El Niño during the spring of 2023 following multiple years of La Niña, likely influenced last year’s severe convective storm activity. This influence was compounded by record-breaking sea-surface temperatures and the subtropical jet stream, a belt of winds located within the tropics.
While the evidence to connect weather patterns and the number of intense storms is compelling, it is difficult to determine if long-term atmospheric changes are the primary driver of increased severe thunderstorm activity without a more extensive historical record.
Nevertheless, it is important to recognize that evolving climate risk is changing historical patterns, and as a result, has the potential to influence the impacts that severe convective storms can have on properties in future climate scenarios.
Affordability Means Texas Weather and Hailstorms
In conjunction with the volatile climate, more people are moving to hail-prone areas like Texas due to the allure of more affordable homes.
“Given how expansive Texas is, it is way more likely hail falls on the ground avoiding homes, office buildings or farms,” said CoreLogic’s Director of Catastrophe Response Jon Schneyer. “But in 2023, many of the largest hailstorms happened to hit major cities in Texas like the Dallas-Fort Worth and Austin areas. When that happens, losses can add up quickly.”
Texas has been attracting newcomers due to its low cost of living, strong economy, and job opportunities. Historically, substantial portions of Texas were sparsely populated, especially in the rural areas where hail is more frequent and severe. However, in recent years, the urban and suburban areas of Texas have been expanding rapidly, creating more demand for housing and infrastructure.
According to a CoreLogic economic analysis, Texas has been home to some of the fastest-growing cities over the past five years. In 2019, and again in 2020, more people moved to Austin than left the metro area. While this trend flipped from 2021 to 2023, there was a strong inter-metro migration pattern from Austin to San Antonio, which saw the fourth-largest influx of residents in 2023. Similarly, Houston grew rapidly and had the third-highest rate of in-migration in the U.S.
Everything Is Bigger in Texas — Including Costs
Despite the increasing number of migrants to this low-cost state, both construction and labor costs are going up. This means that even in Texas, houses are getting pricier. They are also bigger.
Across the U.S., the size of single-family homes has increased in the decades following 1980. In 1985, U.S. Department of Housing and Urban Development data showed that the median square footage for single-family homes was 1,610. By 2022, the median size of a new, single-family home was 2,383 square feet, according to the U.S. Census Bureau. This means that more roof area, windows, and siding are exposed to hail impacts. And the materials for these repairs are increasing in price.
“Areas where people are building bigger, more expensive homes were hit hard,” Schneyer said. “On top of that, inflationary pressures on materials and labor are really driving up individual claims. What might’ve been a $2,000 to $4,000 roof repair 10 years ago could be twice that or more now. So that will really inflate insured losses.”
Inflation has also played a role in driving up the costs of reconstruction, although it has stabilized in recent months. However, asphalt shingles, one of the most common roof-type materials used throughout the U.S., experienced a 40% cost increase over the past five years. Similarly, the cost of ceramic tiles increased by 26% since 2018.
Compounding the increasing square footage that is exposed to Texas weather hailstorms is the challenge associated with finding skilled labor to make the necessary repairs. Since the Great Recession of 2006 – 2010, there has been a persistent reduction in employees entering the construction trades. The result is that the pace of labor attempts to match demand but is perpetually racing to catch up, allowing for premium prices to dominate the market.
Texas Hail Is a Year-Round Peril
Further straining the equation for insurers is the fact that hail is a year-round risk. In May, Texas faced a slew of storms in the lead up to June when CoreLogic estimated that in one week alone, straight-line winds and hail generated between $7 billion and $10 billion in insured losses. Then in September, a hailstorm hit the greater Austin metro with hail stones the size of softballs barreling down on the highly populated area. October then brought large hail to the Lubbock area.
The unprecedented scale of insured losses has insurers and homeowners across the U.S. reconsidering the risk associated with these seasonal storms.
One opportunity to help reduce the vulnerability of its homes to hail damage and lower the costs of reconstruction associated with severe convective storms is the implementation of building codes.
By implementing and enforcing stricter building codes, insurers writing in Texas can gain assurance that mitigating measures — such as using impact-resistant roofing materials, reinforced windows, and durable siding — are routinely recognized.
Research, property data, stringent building codes, and a commitment to preparedness are all lessons that insurers and homeowners can glean from 2023 to get ready to mitigate property risk for the 2024 season.
Understand 2024 Severe Convective Storm Season Risk
2024 SCS Risk Report
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