2008 marked an event that escaped the notice of pretty much everyone except for those in the insurance industry. That year marks the moment when hail losses shot through the roof, and even now, no one can really figure out why.
Before 2008 the average annual hail losses was consistently between $8 billion and $12 billion. In 2008 that number shot all the way up to $19 billion in a single year. Not only that, but that number stayed at $19 billion or higher for the next decade.
So what happened in 2008 that caused this shift to occur? Steve Bowen, a meteorologist for Aon, a risk assessment firm spoke with Insurance Journal about this phenomenon. “There are a number of scientific and socioeconomic reasons that can explain why U.S. thunderstorm losses have increased over time,” said Bowen. “But it remains a bit of a headscratcher as to why 2008 seems to be the magic year that started this trend.”
Forecasters maintain that the increase in hail losses has nothing to do with the frequency of hail storms. Rather it’s what that hail is damaging and the amount of damage that it inflicts.
One of the prevailing features is that with new technology there are more valuable things that get damaged outside these days. More expensive cars, computers and more than get left outside can quickly drive the loss total up if they are damaged.
Hail is also tricky because it doesn’t last, so experts rely entirely on eyewitness reports. Unfortunately, eyewitnesses are notoriously inaccurate. This is particularly true when it comes to estimating the size of hail.
For now, all we can do is speculate as to why this major shift happened in 2008. It’s entirely possible that it’s random chance, but it could be a trend that continues. Time will tell.