Hailstorms are driving record insured damages from severe convective storms (SCS), with losses increasingly tied to high-value assets such as aircraft, buildings, manufacturing plants, and renewable energy infrastructure, according to a recent report by Allianz Commercial.
In its latest Global Risk Dialogue Commercial Insight, Allianz emphasizes the growing threat of SCS to risk management organizations, as global insured losses over the last three years have totaled $208 billion (adjusted for inflation). In 2025 alone, global insured losses from SCS made up nearly half of the total insured natural catastrophe losses and totaled $60 billion, according to Gallagher Re. “While tornadoes may grab the headlines, the greatest SCS losses are caused by hailstorms, with estimates indicating hail accounts for as much as 50%-80% of all SCS losses,” states Allianz.
Drivers of Increased SCS Losses
The factors expanding the risk landscape, Allianz states, include “urbanization, aging infrastructure and assets, inflationary pressures, outdated building codes, supply chain issues, and the degradation of ecosystems.” Meanwhile, technological advances in detection and reporting systems, including AI-based modeling, have improved documentation and influenced trends in frequency.
Another driver is inflation’s impact on the costs of rebuilding and repairing property, an increase that is “compounded by supply chain disruptions such as shortages in skilled labor and materials.” Other drivers include the growing prevalence of solar farms, roofs and roof-mounted equipment such as ventilation or air conditioning (HVAC) units, solar panels, and skylights, which are most commonly damaged during a hailstorm. “The largest losses usually arise from leaks on a roof that result in water damage in premises below, or a power outage that causes business interruption,” states the report.
Geographically, risk is concentrated in certain regions. The central U.S., known as “Hail Alley,” especially the region from Texas through Oklahoma, Kansas, and into Nebraska and Colorado, is known for frequent and severe hailstorms. The frequency of severe hailstorms is rising more rapidly in Europe than anywhere else, according to a recent study, which researchers link to climate change.
Economic Impact
While hail drives the majority of SCS losses, perils such as tornadoes and severe winds also contribute to significant economic disruption. A recent study in the U.S. over the period 1969-2023 suggests that both tornadoes and severe wind events exert measurable economic effects at the local level. “On average, a damaging wind event reduced county-level income growth by around 0.16-0.23%, while tornadoes were associated with slightly larger declines of approximately 0.21-0.23%.” Monetarily, this equates to about $5.6 million for damaging winds and $6.3 million for tornadoes.
Tornadoes alone generate 20% higher economic losses than non-rotating severe wind events, the study continues, primarily driven by “the destruction of physical capital and infrastructure, which disrupts production and local labor markets, alongside indirect effects such as business interruption, transport disruptions, and household financial strain, especially when insurance coverage is limited.”
The report notes that more stringent building codes can reduce vulnerabilities and losses to hail by 12-28% and by over 30% for tornadoes.
Mitigation Strategies
Strategies for mitigating risk include accounting for businesses’ specific vulnerabilities as well as changes in weather patterns and future risks. “Scenario analysis is essential for assessing risk exposure and building resilience to climate perils because it helps organizations understand how different climate futures could affect their assets, operations, and long-term performance,” states the report. “By examining a range of hazard conditions instead of relying only on past patterns, scenario analysis reveals hidden vulnerabilities, identifies possible tipping points, and shows how risks may change over time.”
The report also emphasizes the importance of vigilance, noting that business interruption was the most concerning impact of climate change identified in the 2026 Allianz Risk Barometer with 63% of the votes. “As weather patterns become more volatile, strengthening resilience is no longer optional—it is a fundamental part of safeguarding operations and ensuring long-term business stability,” says Michael Bruch, global head of risk consulting and advisory services at Allianz Commercial.
AI and Mitigation
Bruch notes that traditional catastrophe models have struggled to capture property-specific risk factors or the cumulative effects of hazards such as hail on building envelopes. However, he suggests, “recent industry analysis shows AI-driven models can now process vast amounts of unstructured data, including satellite imagery, roof geometry, material aging patterns, vegetative exposure, and local climatology, to generate far more granular assessments of physical vulnerability than was previously possible.”
AI is also being used to validate or improve existing catastrophe models, helping to improve information gathered from areas where flood, wildfire, or storm datasets have traditionally produced conflicting results. “This shift enables a more proactive mitigation mindset: instead of reacting to losses after a major storm, organizations can use AI-supported insights to identify weak points in roofs, facades, or critical equipment and prioritize upgrades that minimize future damage,” states the report.
Across the insurance industry, AI is being adopted and used for risk assessment, with a 2024 survey indicating that one in four insurers already use AI to assess SCS exposures and 73% believe AI will play a major role in managing climate-related losses going forward, indicating a shift toward proactive, data-driven SCS risk mitigation efforts.