How Severe Convective Storms and Shingle Roofs are Becoming a Growing Challenge

How Severe Convective Storms and Shingle Roofs are Becoming a Growing Challenge
April 4, 2025 6 mins

How Severe Convective Storms and Shingle Roofs are Becoming a Growing Challenge

Severe Convective Storms a growing insurance challenge

As losses from severe convective storms (SCS) continue to increase, insurers are faced with the dual challenge of managing rising claims costs and ensuring the affordability of coverage for their customers.

Key Takeaways
  1. Asphalt shingle roofs, which cover nearly 75% of single-family homes in the U.S., are highly vulnerable to damage from severe convective storms (SCS), as early as 8-10 years after installation.
  2. The increase in SCS insured losses over the past decade can be attributed to exposure growth. As more properties are built in high-hazard areas, the potential for large-scale losses from SCS events increases.
  3. Both policyholders and insurers play crucial roles in reducing losses from SCS events. Policyholders can help with regular maintenance and timely repairs of shingle roofs, while insurers should capture roof cover and age data for more accurate underwriting.

Severe convective storms (SCS) have become a significant concern for the insurance industry, particularly in relation to the durability and longevity of asphalt shingle roofs. This article delves into the impact of the peril, particularly straight-line wind impacts, on shingle roofs, explores the implications for insurers and the insured, and suggests potential insurer strategies for mitigating losses and maintaining profitability while serving their policyholders.

Increased Vulnerability of Shingle Roofs

Asphalt shingles are a common roofing material in the U.S. with nearly 75 percent of single-family homes using this type of roof covering. Recent findings indicate that these roofs are far more vulnerable to damage from SCS than previously thought. A post-event aerial imagery study conducted by IBHS following the 2020 Midwest Derecho offered valuable insights into performance of asphalt shingles in an SCS event. It revealed that asphalt shingle roofs are extremely susceptible to straight-line wind damage as early as 8 to 10 years after installation despite the 20-25 year lifespan advertised by roofing manufacturers. This shorter lifespan can lead to increased insurance claims frequency through more frequent roof replacements.

2020 Midwest Derecho: Cedar Rapids, IA, Asphalt shingle exceedance probabilities by roof age for proportion of roof damaged (credit: IBHS)
Severe Convective Storms
10 year old asphalt shingle roof probability of damage by wind speed (credit: IBHS)
Severe Convective Storms
Did you know? 
  1. By the time a roof is eight years old it has a 1-in-4 chance of at least some damage from a severe convective event.
  2. A ten year old roof is nearly completely destroyed by a severe convective event that produces wind speeds above 100mph.

105%

Every year since 2019 the reported industry combined ratio for homeowners business was 105 or worse.

Source: Homeowners Return on Equity Outlook 2024

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The Joint Challenge for the Insurer and the Insured

The increased frequency of asphalt shingle roof replacements presents a profitability challenge for insurers.  

The current types of insurance cover offered to policyholders may need to be adjusted in a way that implements a different deductible structure for roofs compared to the rest of the home.  An alternative option is to explore co-pays for roof repairs or replacements, thereby sharing the financial burden between the policyholder and the insurer for the roof only. As insurers seek to strike a balance between providing adequate coverage and maintaining profitability, policyholders will also need to take a more active role in maintaining their properties to prevent damage to the roof from these types of perils.

Mechanisms to manage profitability 
  • Increase premiums
  • Increase deductible
  • Separate peril deductible
  • Varied deductible structure dependent on roof age/material type 
  • Actual cash value roof policy dependent on roof age/material type

Exposure Growth Versus Climate?

A significant portion of the increase in SCS insured losses over the past decade can be attributed to exposure growth rather than a fundamental change in the nature of the risk. Since 1990, SCS losses have increased at an average annual rate of 9.4 percent. As more properties are built in high-hazard areas, the potential for large-scale losses from SCS events increases. 

To prove this, we identified four main drivers of exposure change and quantified how much of the overall SCS loss trend they explained. 

  • Real gross domestic product (GDP) accounts for how much “stuff” there is in the economy and grew at an annual rate of 2.4 percent. 
  • Fixed reproducible tangible wealth (FRTW) accounts for how much goods and services are worth and grew at an annual rate of 2.1 percent. 
  • Property cost inflation, measured by the producer price index for all construction, provides a good estimate of how construction costs change over time. This grew the fastest at a 3.0 percent rate. 
  • Population distribution, measured by the housing distribution index, is based on changes over time in housing units in high hazard states like Texas and other Sun Belt states. It grew at a rate of 1.1 percent.
Nominal annual SCS losses and loss and exposure trends from 1990 to 2024
Nominal Annual SCS losses

Loss Mitigation and Reduction Strategies – Everyone can Play a Part

Policyholders and insurers have a role to play in mitigating and reducing losses from SCS events.

Policyholders: regular maintenance and timely repairs of shingle roofs can significantly reduce the likelihood of severe damage. Educating homeowners about the importance of roof upkeep and providing incentives for proactive maintenance can help lower claims frequency.

Insurers: appropriately capturing roof cover and roof age data is key so that insurers can accurately underwrite and price the risk while providing targeted risk advice and adaptation solutions.

Best-in-class insurers carefully manage SCS risk by understanding the dynamic nature of the peril.   

  • Monitor peak exposure concentrations and understand location level risk
  • Implement a holistic view of SCS cost drivers in pricing to ensure rate adequacy
  • Consider the strengths and weaknesses of catastrophe models and leverage those that reflect the latest view of SCS trends and historical experience
  • Proactively track catastrophe events using real-time data sources to assess event impacts as they unfold to ensure that claims are settled quickly and efficiently to minimize loss settlement costs.   

Conclusion

The increasing frequency and severity of severe convective storms pose a significant challenge for the insurance industry, particularly in relation to asphalt shingle roofs. As these roofs demonstrate a shorter lifespan and higher vulnerability to damage, insurers must adapt their strategies to manage rising claims costs and maintain profitability.  Collaboration between policyholders and insurers in loss mitigation efforts will be crucial in achieving a long-term, profitable equilibrium in the homeowners' insurance market as both parties navigate this evolving landscape of SCS related losses.

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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