Tom Mortlock
Tom Mortlock

Climate Risk Advisory Lead APAC


  • Hailstorms are a major driver of insured losses in Australia, yet their less-prolific nature makes them difficult to model compared to other perils with large geographic footprints.
  • Little is currently known about the net impact of climate change on hail risk.
  • Multi-sector collaboration is required to address blind spots in modelling severe convective thunderstorm risk.
  • With support from Aon, the Climate Change Research Centre at UNSW is spearheading research in this area to help inform better risk management decisions.
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This article is authored by Dr Tim Raupach, Lecturer at UNSW Climate Change Research Centre and Associate Investigator at ARC Centre of Excellence for Climate Extremes, and Dr Tom Mortlock, Climate Risk Advisory Lead, Asia Pacific, Aon

Hail – The Forgotten Peril?

Hailstorms are a major contributor to insured losses in Australia and around the world. In Australia, hail drives the Average Annual Loss (AAL) for the insurance industry, being almost twice that of the flood AAL[1]. While there has been much media focus on flooding in Australia, hail may be seen as the ‘forgotten peril’ that still plays a major role in determining home and motor insurance premiums across the country.

Hailstones form when moisture is carried upward by thunderstorm updrafts into cold areas of the atmosphere where supercooled liquid water and ice particles can form. Hailstones then grow as ice particles collide with supercooled water droplets which coalesce on the hailstone surface. Hail therefore occurs within a severe convective storm (SCS) environment, which in itself may be part of a larger synoptic storm, or low-pressure system. While there are other hazards associated with SCS, such as severe downburst winds, tornados, and lightning, it is estimated that hail contributes to more than 70 percent of all SCS-related insurance losses in Australia[2].

The Near Miss Problem

Hail is a difficult peril to model for insurers. Hail events are normally localised and relatively rare, and only a few events are large enough and in the ‘right’ geographic areas to cause a big financial loss.

While ‘direct hit’ hailstorms are rare, they can be costly. The 1999 Sydney hailstorm would have led to more than AUD $8.85 billion of insured losses if it were to occur today, which would represent Australia’s most costly insured natural disaster[3], whereas the event footprint itself only covered the Sydney eastern suburbs and CBD areas. In contrast, the 2022 Eastern Australia floods had a much larger geographic footprint, impacting 35 river catchments in an area stretching south of Sydney to north of Brisbane and resulting in a lower – yet nonetheless significant at AUS $6 billion – level of insurance losses[4].

Climate Change Impacts on Hailstorms

While there remain some blind spots in our understanding of present-day hail risk, larger uncertainties exist regarding the impact climate change will have on the prevalence of hailstorms in the future. Given the importance of hail as a primary loss driver for insurers, how hail risk may change (or is already changing) in a warming world is a key area of research.

Two primary effects of a warmer atmosphere affect hail. Firstly, a warmer atmosphere can carry more water vapour, which in turn leads to the atmosphere becoming more unstable and prone to forming thunderstorms with strong updrafts that can support larger hailstones.[5]

Secondly, a warmer atmosphere implies more melting of hail as it falls. A broad expectation on how hailstorms may behave in a warmer climate is of decreasing surface hail frequency, because of more melting of hail in a warmer atmosphere, but with an increased hailstone size.[6] However, observations and simulations show large geographical diversity in hailstorm changes[7], driven by regional factors that are not captured in the broad expectation.

A Growing Body of Research

A body of research being developed by the UNSW Climate Change Research Centre (a partner in Aon’s Climate Advisory Council) uses reanalysis data, hailstorm reports, and high-resolution simulations to make statistical connections between the large-scale atmospheric environment and hailstorm occurrence, to understand hail properties, and to investigate the effects of changes in hail hazard.

Part of this research is the creation of an improved ‘hail proxy’, which uses statistical links to estimate whether a given atmospheric environment is or is not hail-prone. The proxy is novel in that it is not a one-size-fits-all approach, but rather takes properties of the local environment into account, to be applicable in more situations.

By applying the proxy to reanalysis data, which provide the best estimate of the state of the atmosphere at a given location and time in the past, we can gain a better understanding of the historical hail risk at every location within Australia.

Using Machine Learning to Model Hail Risk

Other research is investigating the use of machine learning models to improve hail proxies. Whereas hail proxies are usually applied to derived atmospheric properties, such as difference in wind by height, machine learning models can be used on the raw profiles of temperature, wind, and moisture from which all other indices are calculated.

This could find links between hail-prone atmospheric conditions and large-scale climate drivers such as the El-Niño Southern Oscillation, which could be used to better forecast extreme storms and their changes in a warming climate. Any such relationship could also signal a step-change in how we model hail risk within a catastrophe loss modelling environment.

Cross-Sector Collaboration Required to Unlock Insights

While we are much more informed amount pricing hail risk today than we were a decade ago, there remains some significant uncertainties in our understanding of the risk posed by severe convective thunderstorms, not least the present and future impact of a warming world on hail risk. Our current understanding is that we can expect a broad reduction in the number of hailstorms, and a possible increase in their severity, with several research efforts now underway to refine these projections.

Given the complexities of modelling hailstorms, and the importance of asset vulnerabilities to hail risk, academic-industry collaboration is a key step to unlocking insights to inform better risk management decisions.

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Aon is at the forefront driving analytical and product innovation in climate risk and resilience. Talk to our specialists for more information.

The Climate Change Research Centre at UNSW is a world-leading research centre in physical and biogeochemical climate science, and educates the Australian and global community about risks associated with climate variability and change.


[1] Aon’s market insights

[2] Aon’s market insights

[3] Insurance Council of Australia Insurance Catastrophe Resilience Report 2022-23

[4] Insurance Council of Australia Insurance Catastrophe Resilience Report 2022-23

[5] Raupach, T.H., Martius, O., Allen, J.T. et al. The effects of climate change on hailstorms. Nat Rev Earth Environ 2, 213–226 (2021).

[6] Raupach, T.H., Martius, O., Allen, J.T. et al. The effects of climate change on hailstorms. Nat Rev Earth Environ 2, 213–226 (2021).

[7] Raupach, T.H., Martius, O., Allen, J.T. et al. The effects of climate change on hailstorms. Nat Rev Earth Environ 2, 213–226 (2021).

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