At CoreLogic, one of the areas we keep close tabs on is

how weather and climate affect property as this can directly affect not only

homeowners but also insurers. While the CoreLogic Hazard HQ team keeps tabs on

an assortment of catastrophic weather events, one of the costliest but least

talked about is hail. And spring is hail season here in the U.S.

Host Maiclaire Bolton Smith sits down with meteorologist

and Senior Leader Curtis McDonald to answer some questions such as how much

damage does hail inflict and how is this damage measured? How rampant is

insurance fraud resulting from hailstorms? What can we expect from this year’s

hail season?

Monitor current climate catastrophes and see in-depth analysis at hazardhq.com.

MAICLAIRE BOLTON SMITH:

Welcome back to Core Conversations: A CoreLogic Podcast, where we dive into the heart of what makes the property market tick — on all levels. I'm Maiclaire Bolton Smith, your host and curious observer of all things related to property — from affordable housing to market trends and the impacts of natural disasters to climate change —I want to converse about it all.

Because it's so unpredictable, not every year is the same story. There are broad variations in damage claims from year to year, which can make it difficult for insurers to accurately forecast for claims while also making sure to account for the fraudulent activity and outlier years that will require them to tap into their financial reserves. It can also make it challenging to accurately identify and track the core of these spring storms and understand the full impact of the damage that this falling ice can inflict.

To dive into the subject, we've once again called on one of our favorite meteorologists, Curtis McDonald. Curtis, welcome back to Core Conversations!

Curtis McDonald:

Thank you. Glad to be here.

MBS

So our listeners may remember you from Episode 14 last season when you tried to convince me to join you tornado chasing, but there's more to you than storm chasing. So first, can you just remind our listeners a little bit about your background before we jump in?

CMD:

Yeah, absolutely and I still plan to get you out in the field to go storm chasing, that offer still exists-

MBS

No.

CMD:

But my background, it's actually meteorology. As you mentioned, I went to the University of Oklahoma, and here at CoreLogic, I am the director for our weather verification services from a product perspective. So I oversee all of our forensic hail technology, wind technology, tornado technology and soon-to-be flood technology, but really looking forward to dive in and focus on hail today with you.

MBS

Fantastic. Okay, so let's start with some basic scene-setting questions here. How common is hail anyway? I said it's common, how common is it?

CMD:

Well, it's quite common. I mean, it's quite common across the United States. Not only in the United States but also in other parts of the world. Well, other countries, Canada, parts of Europe, Australia and New Zealand, so it's not just a problem here in the United States. Hail can occur really any month of the year, so it's not just tied to a specific season, though we do typically see in the United States between April and June is our largest time to experience the damage from hailstorms.

MBS

MBS

CMD:

Yeah, that's a good question to kind of kick things off here. Well, so far this year has been, from a hail perspective, it's been a little bit of a quiet start, which is typically a little bit common for the season that we're in with the La Niña, we refer to as La Niña, which is actually cooling of waters out in the Equatorial Pacific can lead to a little less hail activity or maybe a delayed hail season if you will—

MBS

Okay.

CMD:

But we're really just getting into the hail season now. So there's still a lot of time ahead of us for these storms to take place. I think the most significant that we saw so far this year was actually March the 21, where we saw quite a bit of tornadoes and some hail activity from those supercell thunderstorms across parts of Texas, parts of Louisiana, where particularly Round Rock, Texas, was impacted by the tornado. There was also a tornadic activity the next day in New Orleans. And then we also had a little bit of a hail event in the Dallas-Fort Worth area back in late February.

MBS

Yeah. I'm glad you brought up that March 21 event, Curtis — And that reminds me too that hazardhq.com, we do dive into that event a little bit more too. We can probably link that in the show notes too to offer listeners a little bit more about that particular storm — You mentioned tornadoes, and it triggered another thought with me. I know with tornadoes we talk about the Enhanced Fujita, the EF scale. And with hurricanes, we talk about the Saffir-Simpson intensity scale, SSI. But what about hail? Is there a scale to measure hailstorms?

CMD:

Yeah, there's really not a scale that we have for measuring hailstorms. Typically, what we do is just measure the diameter of a hailstone and we also look at the damage costs that these storms occur, and that's really the scale that we have to measure hail.

MBS

Okay. Okay. So it's more of a, it caused X number of homes to be damaged or X number of dollars in damage?

CMD:

Total damage. Yeah. So whether that's agriculture, cars, automobiles, commercial buildings, residential homes, really anything that's outside is susceptible to these hailstones. So it's... They can be extremely destructive, and they can range anywhere from just a very small pea-sized hail to as big as —we've seen in the United States upwards of six plus inches. Personally, I've seen almost six-inch diameter hail, so they can be extremely destructive and they really don't leave. They can leave nothing untouched if you will.

MBS

CMD:

Yeah, I think that's also a really great question because when you look at historically speaking, year over year, hail is actually the number one loss for insurance companies over all other perils when you average it out. Now certainly big hurricanes or big wildfires can exceed hail losses in any given year. But I think it's really tied to a lot of the times the damage can go undetected or it's not really visible from an aircraft or from a helicopter where you have news choppers that provide these levels of destruction after a tornado or hurricane, for example. So yeah, they're just really not as easy to capture in media.

MBS

Sure. No, that definitely makes sense. Okay. Something that we are going to talk about a lot on this podcast this year is climate change. And anytime we talk about anything related to weather, I need to bring it up. So do you anticipate climate change will affect the severity and frequency of hailstorms in the future? I mean, we're already seeing hail being the most frequent peril. Are we going to get more of them and are they going to get more severe? Do you think we're going to get hailstorms bigger than six inches?

CMD:

Yeah, well, I think that's the million-dollar question right now for the scientific community in particular. There's a lot of research going in just in general for not only severe and convective storm perils, like hail and tornadoes and straight line wind events, but hurricanes and wildfires and so forth. But one thing that we may see is an increase in the duration of the hail season as the climate starts to warm. So there could actually be an earlier start and a later end that could really amount to an extra few weeks, or even maybe a few months that we really see the peak season if you will. And this extra time by itself could really increase the amount of from a climatological sense-

MBS

For sure. Yeah.

CMD:

Also, from an environmental perspective, it's kind of more difficult to say we expect conditions to become more favorable for large hail, but there's also so many conditions and how they interact with each other. It's really hard to say how this ultimately may translate into hailstorm frequency and severity. One thing that we do know is that, as temperatures warm across the globe, the atmosphere can actually hold more moisture. So that's one of the key components for severe and convective thunderstorms that produce these large hailstorms and particular supercells. But we also might see a... potentially see a decrease in vertical wind shear or wind speeds aloft as we're not seeing as strong of temperature gradients as you move up off the ground. So there's just a lot of different variables that go into... It's very dynamic, obviously supercell thunderstorms or thunderstorms in general. And I see that there will continue to be a lot of research over the years as we kind of learn and try to project out specific impacts to climate change, really on hail, tornadoes, straight line winds and other perils.

MBS

Yeah, no, definitely really interesting. I know we often talk that seems like this is not a wildfire season anymore, and we're just seeing wildfires year-round. And to think that it's possible that could happen with some of the meteorological perils as well too. And we could see extending seasons for hail, tornado, severe convective storms, even hurricane season, we're seeing hurricanes earlier and earlier each year too. So, yeah, that'll be really interesting to see. I guess if we look at this from an insurance perspective, thinking about some of our listeners out there that may be in the insurance industry and knowing that hailstorms aren't going anywhere and very likely could become more severe, more frequent and seasons could be longer, one thing that becomes important is being able to manage them. So can you talk a little bit about why tracking the storms is so important, specifically from an insurance perspective?

CMD:

Yeah, absolutely. These storms really can roll in and they can wreak havoc from multiple different states and in multiple different areas of the country almost simultaneously. So from a carrier perspective, it's really important to understand where these storms could take place, days in advance to allow them to start planning, staging resources in certain areas. And then more importantly, if the storms do come to fruition and the hail does actually fall and impact and cause damage to policyholders, it's really important to know the number of customers that potentially were impacted. So leveraging forensic data is what we refer to here at CoreLogic and that's largely what I support, again, in the intro I talked about our forensic hail algorithm. We have developed a unique product that helps our insurance customers understand the impacts to their policyholders or their portfolio after these hailstorms take place. And really that's really important for them to, first to start their deployment of resources. So if you had an insurance carrier that had one hundred policyholders impacted versus one thousand, their response is going to be quite different. So it's really important to get that information as quickly and accurately as possible, to know where they can start expecting the number of claims for their resource and their deployment of those adjusters into the field to start repairing the properties, getting people back to normal following these destructive events.

MBS

Yeah. I want to dive into that a little bit deeper because this forensic technology is really important. And I think many people when they think of meteorologists, they think that it's simply about forecasting. But we're not looking at forecasting here, we're really talking about of forecasted data versus observed and verified what exactly did happen. So can you talk a little bit deeper about that? You kind of touched on that, but a little bit more about why this data is so important for verifying claims and why it really matters to insurers?

CMD:

Yeah, well, unfortunately, the day and age that we're in today, there's just a lot of data that exists in. I mean, there's good and bad there because there's good data and then there's not so good data. And it really comes down to ultimately what that data or that technology that data set was originally developed for. And we see here in the United States, given the federal government under NOAA, which stands for the National Oceanic and Atmospheric Administration, it's a large federal organization that houses things like the National Hurricane Center, the Storm Prediction Center, the National Severe Storms Laboratory. So a lot of federal agencies and research goes into forecasting because they're really focused on protecting life and property of U.S. citizens. So a lot of their research models, technologies are really all in that forecasting space-

MBS

Right.

CMD:

So how we can get better at predicting these events? How we can get better at warning these events? And it really stops there. They don't do a lot in the forensic space. So once the events do take place, that's really where CoreLogic and the private sector is coming in and providing some of that information. But if you look at... As I mentioned, there's a lot of data, you got to look at the source of that data and what was it originally developed for. And because the forecasting data that's developed by these federal agencies — it's all taxpayer-funded — A lot of those algorithms, those products get made readily available in the public domain. So we see a lot of different companies out there that are using forecasting data for forensic analysis. And that's really problematic because when you really peel back all the layers and look at why that data was developed, again, it was initially developed for forecasting purposes —

MBS

Right. Yeah.

CMD:

And specifically with hail, they're actually designed by nature to almost predict a worst-case scenario.

MBS

Oh, interesting.

CMD:

Yeah. And it makes a lot of sense and it works really well for a forecasting application. So let's say I'm a meteorologist at the National Weather Service and I'm responsible for issuing severe thunderstorm warnings out ahead of these hailstorms in the Dallas-Fort Worth Metro. I don't want to issue a severe thunderstorm warning for one-inch diameter hail and then all of a sudden Dallas-Fort Worth is impacted by tennis ball-sized hail at 2.25, 2.5 inches. I'd much rather have that information coming to me from this technology saying, "Hail possible up to 2.5 inches," and I put that warning out, and let's hope that it's smaller hail. So the problem is if you have data that was originally developed for forecasting, and you try to use it in a forensic setting saying, "This is what actually did happen," It's not going to work very well. So, and specifically with hail in this use case that I just discussed, if you use that data to try to estimate the number of claims, for example, for an insurance carrier, you're going to typically have over-exaggerated hail sizes. You're going to have over-exaggerated hail pass. So it is really important to understand the data, the data quality and really use the technology that was developed specifically for forensic analysis if that's what you're trying to accomplish.

MBS

Yeah. I'm glad you pointed that out because it really comes down to the perspective of what is the intent of... data intended to be used for, and a lot of the National Weather Service, NOAA data that you talked about, their priority is public safety. Their priority is keeping people safe, and that's why sometimes over-estimating or over-forecasting what may happen is important. And while that may not work from an insurance perspective and why the forensic data is so important, it's important to give people a heads up so that people can protect themselves to stay safe.

CMD:

Absolutely.

MBS

Okay. So you just touched on a lot of this on why it's really important for insurers to have forensic data and really be a part to initiate their catastrophe response plan. But one thing with insurance claims that often comes up is fraudulent claims. So I just want to finish off today, can we talk a little bit about how common is fraud when we look at hailstorms?

CMD:

Yeah, well, unfortunately with hail, and just like other insurance fraudulent claims like theft or vandalism, water damage, arson, we do see quite a bit of fraud, unfortunately, with hail claims. And I think it's multi-fronts, but one of the things that, especially now, it's more relevant with this, the rising cost of repairs and carriers are starting to raise deductibles as well as the actual cash value of a roof, for example. So what it does is it takes into account the depreciation of your roof based on the age and the quality of the roof, which is called ACV. Actually, that just happened to me here in Oklahoma, my deductible went from 1% to up to 1.5%. So you have these rising deductible costs, you have the amount that these carriers are willing to pay out on the roof I think starts to make this fraud more common. And ultimately, these fraudulent practices or these fraudulent claims that come in, make all of us suffer. It's forcing the carriers to start to raise their premiums, starting to raise their deductibles. So really all of the... Across the board, everybody's ultimately suffering from these — whether it's the policyholder themselves or a contractor that might be manufacturing damage or attempting damage to a roof mimicking what we see with hail.

MBS

Okay. So that kind of just leads me to one final thought here as we're closing. In addition to fraud then are there any other challenges that the insurance industry is facing from hail that having this accurate forensic data could help them with?

CMD:

Yeah. So in addition to validating a hail claim from a fraudulent perspective, one of the things that we can help insurers do is validate the date of loss. So with hail, as I mentioned kind of earlier in the podcast, hail can go undetected or the damage from hail can go undetected, particularly to a roof. And you might have a claim that comes in for 12 months, 24 months after that hail took place. So from a carrier perspective, really understanding that date of loss, making sure that that policyholder was indeed active or that policy was valid at the time that the damage actually took place is really important. So that's another area that we can help with our forensic technology is run a historical look-back at a specific address or a specific property to see what has happened over the last... Actually back to 10 years of hail activity. Again, just as a tool for carriers or an adjuster to validate that hail claim and validate the data loss and to make sure that policy was indeed active when that damage took place.

MBS

Wow. Well, so interesting Curtis, and thank you for joining me again and thank you for being here on Core Conversations: A CoreLogic Podcast.

CMD:

Well, thanks for having me back again, look forward to getting you out into the great plains of Oklahoma and Kansas this spring maybe and seeing some tornadoes and hail too.

MBS

We'll talk about that, but no. Okay. And thank you for listening. I hope you've enjoyed our latest episode. Please remember to leave us a review and let us know your thoughts and subscribe wherever you get your podcast to be notified when new episodes are released. And thanks to the team for helping bring this podcast to life. Producer Jessi Devenyns, editor and sound engineer, Romie Aromin and our social media duo of Sarah Buck and Makaila Brooks. Tune in next time for another Core Conversation.