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Rising convective storm losses test insurers as property rates fall in competitive market - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Rising convective storm losses test insurers as property rates fall in competitive market by Claire Wilkinson Large convective storm losses have become a concern for insurers as annual losses of more than $50 billion have become the norm. At the same time, an influx of new capacity is driving property insurance rates lower. / Jason Whitman/NurPhoto/Reuters Catastrophes , Property Allianz , Aon , Arthur J. Gallagher & Co. , Beazley , Marsh & McLennan , Munich Re Apr 24, 2026 Tensions are rising in the commercial property insurance market as elevated severe convective storm losses collide with softening rates. After several costly years, and despite a moderation in first-quarter losses, debate is sharpening over how severe convective storm events are defined, sources say. While individual storms are typically smaller than hurricanes, losses are rising as inflation, expanding urban exposure and increasing hail claims turn some events into catastrophe-sized losses (see related story below). Severe convective storms have become the most costly insured peril globally, ahead of tropical cyclones, said Peter Tavella, New York-based chief broking officer — national property broking, at Aon. Annual U.S. severe convective storm losses between $50 billion and $60 billion are increasingly viewed as a baseline rather than an outlier, he said. What makes severe convective storms different is the combination of high frequency and increasing severity, Mr. Tavella said. “A lot of these events fall below traditional catastrophe reinsurance attachment points, so that means that primary carriers are holding a bigger share of the losses on their books,” he said. The shift has put greater focus on pricing, deductibles and portfolio management as insurers absorb more frequent losses, though terms are easing under competitive pressure. A softening property market is creating renewed pressure on underwriting discipline for severe convective storm risks, said Nancy Dorvil, New York-based head of property North America at Allianz Commercial. Insurers had tightened deductibles, terms and pricing in recent years to reflect higher severe convective storm losses, she said. But with the influx of new capacity, the market is clearly softening, which “creates this tension” between maintaining discipline and retaining business, Ms. Dorvil said. “We’re balancing the need to underwrite the exposure adequately with the need to grow and keep accounts,” she said. Insurers are willing to compromise on terms and conditions and to reduce deductibles that increased sharply in the hard market, said Martha Bane, Glendale, California-based property practice leader at Arthur J. Gallagher & Co. Wind and hail deductibles in the 3% to 5% of insured value range are more negotiable, particularly for large, diversified portfolios, while some insurers will consider flat deductibles, she said. “When you look at a very geographic-centered client, like, say, a university right in tornado alley, they can be a little bit tougher, but if that particular placement generates a lot of premium and competition, then we see those deductibles being pressured downwards,” Ms. Bane said. Insurers are also easing roof restrictions, with some extending the age threshold at which actual cash value coverage applies, she said. Actual cash value accounts for depreciation. Reinsurers view severe convective storms as both a frequency and a severity risk, said Tehya Duckworth, senior vice president and a property treaty reinsurance team lead at Munich Re Specialty — North America in Princeton, New Jersey. “What’s been of concern more recently is the frequency of severity. That’s going to impact individual portfolios differently based on their geographic distribution,” she said. Severe convective storms are a key exposure for regionally concentrated insurers, particularly in the Midwest, even as large global reinsurers remain more focused on tail events such as hurricanes, Ms. Duckworth said. Terms tightened in 2023 with higher attachment points and retention levels for severe convective storm risks, but inflation and growing exposures are eroding those changes, suggesting further increases in attachment points may be needed, she said. Defining storms Meanwhile, the lack of a standardized definition of severe convective storms across the industry is fueling debate about how losses are categorized and aggregated. Definitions of severe convective storms vary widely by insurer, said Gregory Mann, Atlanta-based U.S. property placement leader for Marsh Risk. Some policies cover a broad range of wind-related events, while others have specific triggers, such as hail or defined wind speeds, he said. “It varies by carrier and by exposure, particularly based on location and aggregation,” with insurers taking different approaches in highly exposed states like Texas or Oklahoma versus others, Mr. Mann said. Uncertainty about which authorities or metrics determine severe convective storms creates challenges for capacity management, said Lindsay Shipper, Atlanta-based head of commercial property, North America, at Beazley. “We haven’t landed on a consistent definition at this point … Just in the last couple of weeks, I’ve probably seen 15 different SCS definitions come across my desk … with underwriters asking, ‘what does this wording mean?’” she said. There is no single scientific definition of a severe convective storm event, said Karen Clark, founder and CEO of Boston-based catastrophe modeler Karen Clark & Co. KCC defines severe convective storms meteorologically, based on the dynamics of the atmosphere, she said. “Five different insurers … could give you five different definitions of when that event started and when it ended,” Ms. Clark said. Verisk’s Property Claim Services unit defines severe convective storm events using a combination of meteorological analysis, claims activity and insured loss thresholds, said Harry White, London-based head of commercial strategy at PCS. Events are designated once systems identified by meteorologists are shown to generate elevated claims across multiple insurers and insured losses exceed $25 million, he said. Key perils include tornadoes, straight-line winds and hail, and events can last for days or weeks, with no minimum duration requirement, Mr. White said. Hail claims surge amid cost hikes Hail is a leading driver of severe convective storm losses as more frequent events and rising asset values increase claims. A single hailstorm can now generate catastrophic financial losses similar to a major hurricane, said Jon Schneyer, director of research and content at catastrophe modeler Cotality. Unlike tornadoes, which cause localized, concentrated damage, hailstorms generate widespread losses across large geographic areas, he said. “At the 50-year return period, we’re looking at about a $34 billion SCS loss, about $28 billion of which would be hail. At the extreme tail end, SCS losses are in the order of about $71 billion, roughly $50 billion of which is hail,” Mr. Schneyer said. Inflation, rising labor costs, material shortages and population growth have combined to drive higher severe convective storm losses in recent years, said Nancy Dorvil, New York-based head of property North America at Allianz Commercial. Risk management decisions should be informed by exposure analysis and data, Ms. Dorvil said. Using more resilient construction materials and prioritizing risk avoidance is critical, she said. Underwriters consider roof age, construction materials and whether hail guards have been installed on rooftop equipment, said Lindsay Shipper, Atlanta-based head of commercial property, North America, at Beazley. “It would be foolish for any carrier at this point not to be taking a close look at SCS,” she said. Hail accounts for as much as 80% of insured losses from severe convective storms, according to a recent Allianz Commercial report. Damage to aircraft and solar panels, and roof damage to warehouses, manufacturing facilities and data centers, are among the costliest causes of claims, the report said. 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