With summer closing in, the natural catastrophe risk on the minds of many insurance professionals and members of the public is likely bushfires. The concern is understandable: according to the NSW Rural Fire Service there are currently about 50 fires raging in different parts of that state. In Victoria, 41 fire incidents were reported Monday on the VicEmergency website.
An October report by insurance giant QBE found that nearly 85% of Australians are concerned about the impact of El Niño and the consequent increased likelihood of bushfires.
However, now the Australian insurance giant is drawing attention to the threat of hailstorms. The local hail season typically runs from October through to January.
According to QBE, its claims data shows that more than 3,000 hailstorm-related claims have already been lodged this year, each one costing an average of $21,000.
A recent QBE survey of about 1,000 customers also found that more than half who had lodged an insurance claim named hail as the reason for their damage claim. A QBE release said this amounts to “more than flood, bushfire and storm combined.”
In 2022, nearly half of hailstorm-related claims were made in January and October through December.
However, the unpredictable nature of hailstorm timings could also be a reason that many Australians currently aren’t so conscious of the risk they pose.
Arron Mann (pictured above), general manager of short tail claims for QBE AUSPAC, told Insurance Business that the most significant recent hail event occurred in Newcastle, NSW, in late May.
According to the Insurance Council of Australia (ICA), within 72 hours, more than 7,500 claims were lodged as result of that event, more than 6,000 related to damage to motor vehicles.
Mann said this event also illustrated how hail impacts motor vehicles “at a much higher frequency.”
He said the current hailstorm season has been “relatively moderate so far” – however, it is still early in the cycle and so “vigilance is crucial”. QBE hoped to raise peoples’ awareness of the risks.
“With the increased threat of hail approaching, it’s wise home and vehicle owners get proactive and take measures to better prepare and protect their assets,” Mann said in the release. “Simple things like setting up weather alerts or getting your car to an undercover carpark before hail strikes can help protect your vehicle from damage.”
The QBE hailstorm specialist said brokers can play a risk management role too.
“Insurance brokers can also help raise awareness about hailstorms by encouraging customers to stay informed about weather bulletins, especially those mentioning the likelihood of hail, advising them to park under cover during the hail season, perform maintenance to their roofs and clear out drains and downpipes,” Mann said.
He said one feature of hailstorms that makes the risk very different to other nat cats is how they are so indiscriminate.
“Unlike floods and bushfires, which are predominantly specific to their location and surroundings,” Mann said. “Hailstorms are indiscriminate and likely to hit entire suburbs, regardless of geographic nuances like how close you are to bushland or the local river systems.”
He said “the significant volume and variability hail damage can cause” is what makes this nat cat challenging for insurers.
“Some hail may cause no harm, while others can penetrate roofs, insulation, ceilings and even damage floor tiles,” said Mann. “It’s important not to underestimate the damage they can cause.”
In the release, QBE included steps insureds can take to better prepare their property and themselves for the threat of hailstorms. The advice included safely pulling over to the side of the road during a hailstorm and making an emergency plan.
Until last year’s floods in NSW and Queensland in February and March, the 1999 Sydney hailstorm was the most expensive recent natural disaster in Australia’s history. Based on ICA data, the claims cost for that hail event would be about $5.8 billion today.
In January this year, CRESTA’s industry loss index, known as CLIX, reported that the 2022 floods generated losses of $6.76 billion.
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