The frequency and intensity of severe convective storm (SCS) events have increased significantly leading to insured losses in billions of US dollars globally, but these risks can be mitigated with a combination of traditional resilience measures and artificial intelligence (AI) solutions, a recent Allianz report highlights.
Last year alone, these unpredictable events accounted for nearly half of all insured natural catastrophe losses, totalling over US$60 billion. Between 2023 and 2025, losses even accumulated to a total in excess of $200 billion , according to Gallagher Re.
The US is the primary hotspot for SCS, responsible for over 80% of global insured loss value. This trend aligns with natural catastrophes ranking in fifth place consistently in the Allianz Risk Barometer.
The Allianz report identified hailstorms as the most significant driver of SCS losses, estimated to account for 50% to 80% of all claims.
While the US is the global leader in hail-related claims, Allianz Commercial analysis shows that many other regions have also suffered substantial hailstorm damages.
“Building resilience against this peril is therefore not a nice-to-have but needs to be on the agenda of every company with exposed assets in high-risk areas. But addressing this peril requires more than traditional scenario planning. New approaches leveraging AI are able to identify physical vulnerabilities in advance, enabling proactive risk mitigation to build resilience
Therefore, companies with exposed assets in high-risk areas must prioritise building resilience against this peril, Allianz states. Traditional scenario planning is insufficient; new AI approaches can proactively identify physical vulnerabilities for effective risk mitigation.
Thomas Lillelund, CEO of Allianz Commercial, commented: “Severe convective storms are still often viewed as a ‘secondary peril’, yet their cumulative losses now rival – and at times exceed – those of primary perils like hurricanes.
“This reality highlights the urgent need for businesses to reassess their risk exposure and strengthen operational resilience through proactive, locally informed measures that limit both physical damage and disruption.”
SCS exposures have been intensified by population growth and development into hazard-prone areas, with rapid urbanisation, aging infrastructure and assets, and inadequate building codes, can all heighten the risk and value of losses.
Despite their limited spatial footprint and brief duration, SCS, particularly in densely populated regions, are a major source of economic and insured losses.
Damage to aircraft, buildings, manufacturing plants, and renewable power generation, including solar panels, are among the most expensive drivers of hail claims, according to Allianz Commercial analysis.
Claim severity is also exacerbated by inflation, which increases repair and rebuilding costs, and supply chain disruptions like shortages in labour and materials.
Mitigation strategies for withstanding SCS with minimal damage will vary depending on the nature of a business’s activities and the local weather systems it is subject to, Allianz stated.
Scenario analysis is key for assessing climate risk and building resilience. Instead of reacting to losses after a major storm, Allianz analysts suggest that organisations can now use AI-supported insights to identify vulnerabilities in assets, such as roofs, facades, and equipment, prioritising upgrades to minimise future damage.
This helps organisations understand how various climate futures will impact assets, operations, and performance, revealing hidden vulnerabilities and tipping points.
This forward-looking approach enhances decision-making, allowing businesses to test adaptation, focus investment, and design strategies effective across multiple future conditions.
“Traditional catastrophe models have long struggled to capture property-specific risk factors, such as roof type and asset value, or the cumulative effects of hazards like hail on building envelopes,” explains Michael Bruch, Global Head of Risk Advisory Consulting Services at Allianz Commercial.
Adding: “As AI becomes embedded in core risk processes, its most meaningful benefit for customers is its ability to support smarter, evidence-based resilience strategies that adapt to changing weather patterns, rather than relying on historical norms. A data and AI-driven risk management approach is the future and will be essential for organizations aiming to thrive in an increasingly volatile climate environment.”
