New CoreLogic Report Shows Tornado and Hail Risk Extends Far Beyond Great Plains States

CoreLogic announced the release of its Tornado and Hail Risk Beyond Tornado Alley report. The new research findings from CoreLogic, based on historical weather patterns, reveal that severe weather risk extends far outside the narrow eight-state corridor in the U.S. Midwest, commonly known as “Tornado Alley,” traditionally considered to be the area in which tornado and severe hail risk is highly concentrated.

U.S Tornado Risk (Source: CoreLogic, 2012)

According to CoreLogic, the report was developed to provide the insurance industry additional insight into the true extent of tornado and hail risk in the U.S. following a record-breaking year of weather related disasters in 2011 and has been released in tandem with the launch of two new CoreLogic risk assessment products, Wind Probability and Hail Probability. These data layers will provide insurers with a unique level of spatial and content granularity to assess property level wind and hail risk.

“The extensive destruction wrought by convective storms in 2011, which produce hail, strong winds and tornados, captured the attention of the public and forced many insurance companies to rethink the way they assess natural hazard risk,” said Dr. Howard Botts, vice president and director of database development for CoreLogic Spatial Solutions. “The apparent increase in the number of incidents and shift in geographic distribution of losses that occurred last year in the U.S. called the long-held notion of risk concentration in Tornado Alley into question, and is leading to changes in risk management policy and procedure.”

The Tornado and Hail Risk Beyond Tornado Alley report analyzes hazard risk at the state-level across the U.S using the new CoreLogic wind and hail data layers. Key findings include:

• Tornado risk actually extends across most of the eastern half of the U.S. rather than being confined to the Midwest.
• According to data from the National Oceanic and Atmospheric Association (NOAA), of the top ten states with the highest number of tornado touchdowns between 1980 and 2009, only three actually fell within Tornado Alley.
• At least 26 states have some area facing extreme tornado risk.
• At least 11 states have significant areas facing extreme hail risk, and almost every state east of the Rocky Mountains has some area facing a moderate or higher level of hail risk.
• The area of highest hail risk extends outward from the central Great Plains to include states as far east as Georgia and the Carolinas.

U.S. Damaging Hail Risk (Source: CoreLogic, 2012)

CoreLogic reports that unlike most generalized wind and hail data, which provide a risk rating for large geographical areas, the new CoreLogic risk assessment products pinpoint and predict the probability of a wind or hail event using 10 x 10-meter property-level grid cells. Developed using highly scientific models, these new data layers are much more precise than the more traditional calculations based on ZIP codes or counties. Using a probabilistic rating in addition to a general risk rating allows users a more precise understanding of the risk of damaging winds and hail for properties in question. Individual addresses or a complete portfolio can be evaluated and the usual ranges of “high” or “medium” risk are now broken down into specific probability ranges.

“Insurers cannot afford to rely on inprecise data,” said Botts. “Decision-making based on general risk rating over large geographic areas is little more than a best guess and can lead to common errors, such as incorrectly identifying properties or assigning risk to the wrong property. The additional precision of the products CoreLogic is introducing today provides insurers with the information necessary to better assess wind and hail risk, minimize loss and maximize underwriting profits.”

According to the announcement, the new CoreLogic Wind Probability product predicts the likelihood of multiple damaging wind events including tornadoes, hurricanes, straight-line winds striking an individual property and takes into account special wind areas (isolated areas designated by the Federal Emergency Management Agency in which the magnitude of the local wind speeds is affected by local conditions). Additionally, the model used to derive both the wind and hail data layers also factors in short-run randomness of events. Used together, the wind and hail data layers offer an industry-leading level of accuracy and the most complete picture of the risk that is inherent in these weather related events. Both of the wind and hail products offer nationwide coverage and can be integrated directly into existing geospatial or underwriting systems, or can be accessed via the Xiance™ Desktop, a platform that CoreLogic recently introduced to provide insurers easy access to precise hazard risk and premium tax data.

For a complete copy of the Tornado and Hail Risk Beyond Tornado Alley report, which includes charts, images and risk maps for the top 16 states outside of the traditional Tornado Alley corridor with the greatest exposure to tornado and hail disasters, visit www.corelogic.com/about-us/researchtrends/tornado-hail-research-report.aspx.  For more information regarding the CoreLogic Wind Probability and Hail Probability products visit www.corelogic.com/products/wind-and-hail-risk.aspx.