Date: June 25, 2013 Regarding: 2010-2012 United States Hail Loss Claims and Questionable Claims (Public) Prepared By: David Fennig, Strategic Analyst

Executive Summary

This ForeCASTSM illustrates the trends in both hail loss claims and hail loss questionable claims (QCs) referrals in the United States (US) from 2010 through 2012. Overall, hail loss claims increased 84% from 2010 through 2012. In this same timeframe, hail loss QCs increased overall by less than 1%. Texas was the top state in both hail loss claims and QCs from 2010 through 2012; with 320,823 claims and 1,053 QCs. The top 10 states represented 63% of the total number of hail losses and 76% of the QCs between this same timeframe. “Personal Property Homeowners” (PPHO) was the policy type most affected by both hail loss claims and QCs from 2010 through 2012. On average, PPHO policies were represented more than twice as often as the next most popular policy type (Personal Automobile) in both hail loss claims and hail loss QCs over that three year span.

Introduction

According to the National Oceanic and Atmospheric Administration (NOAA) (http://www.ncdc.noaa.gov/billions/events.pdf), multiple hail storms between 2010 through 2012 have caused billions of dollars worth of damage across the US. In June, 2012, an outbreak of storms in Colorado caused over $1 billion worth of damage alone. Recent trends indicate that these types of storms have only proven to be more widespread and costly. In an effort to identify recent trends in hail loss claims, an analysis of the Insurance Service Office (ISO) ClaimSearch data and the National Insurance Crime Bureau (NICB) QCs was performed. Claims containing the loss type “hail” were analyzed with the following data parameters: claims with a loss date between 2010 and 2012, and QCs referred within the same period of time. This report is divided into 2 sections. Section 1 analyzes the overall US hail loss claims from 2010 through 2012. Section 2 analyzes the hail loss QCs submitted for the same time period.

2010 – 2012 United States Hail Loss Claims and QCs June 25, 2013 Page 2 of 9

Section 1: United States Hail Loss Claims

A total of 2,018,466 hail loss claims were identified with a loss date from January 1, 2010 through December 31, 2012. Hail loss claims increased 84% between 2010 and 2012; from 467,602 to 861,597 respectively.

Hail Loss Claims By Loss Month The following table shows hail loss claims, by loss month, from 2010 through 2012. Most of the hail loss claims occurred in the spring and summer months, between March and July. This is likely due to increased numbers of thunderstorms during this time period. Research performed at the NOAA “Storm Prediction Center” (www.spc.noaa.gov) supports these findings. Between 2010 and 2012, NOAA hail reports were found to be most numerous in April, May and June, which is reflected in the monthly averages of hail loss claims shown below.

Note: Percentages have been rounded to the nearest whole number.

Month 2010 2011 2012 Monthly Average

January 6,908 3,999 10,801 7,236

February 4,541 6,981 15,923 9,148

March 34,874 45,772 146,993 75,880

April 48,944 205,511 226,162 160,206

May 101,479 163,946 149,138 138,188

June 70,772 93,947 152,640 105,786

July 40,291 51,425 79,288 57,001

August 14,929 68,103 28,619 37,217

September 37,915 16,382 33,042 29,113

October 98,164 24,023 8,220 43,469

November 6,194 5,361 6,357 5,971

December 2,591 3,817 4,414 3,607

Total 467,602 689,267 861,597

Yearly Percent Change - 47% 25%

Hail Loss Claims 2010 - 2012: By Month

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The following graph shows hail loss claims by month from 2010 through 2012.

Hail Loss Claims By Loss State The following table represents the top 10 loss states with the largest combined total of hail loss claims from 2010 through 2012. These loss states represent 63% of the total hail loss claims during this time. Texas was the top loss state with 320,823 claims, or 16% of the total claims between 2010 and 2012. This was more than double the state with the second highest amount of hail claims, Missouri.

Note: Percentages have been rounded to the nearest whole number.

State 2010 2011 2012 Total State % of US Hail Claim Total

Texas 48,736 121,613 150,474 320,823 16%

Missouri 14,365 32,511 91,981 138,857 7%

Kansas 23,795 60,242 42,453 126,490 6%

Colorado 34,851 25,514 57,753 118,118 6%

Oklahoma 41,448 24,147 48,573 114,168 6%

Illinois 22,661 32,346 52,765 107,772 5%

Tennessee 5,119 45,942 41,192 92,253 5%

Indiana 7,177 24,050 59,827 91,054 5%

Arizona 81,378 4,837 2,241 88,456 4%

Kentucky 1,392 3,862 72,585 77,839 4%

Yearly Top 10 State Totals 280,922 375,064 619,844 1,275,830

Top 10: Percent of Yearly Total 60% 54% 72% 63%

Hail Loss Claims 2010 - 2012: Top 10 Hail Loss States

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The following graph shows hail loss claims for the top 10 hail loss states from 2010 through 2012.

Hail Loss Claims By Policy Type

The following table represents the top 5 policy types identified in hail loss claims from January 1, 2010 through December 31, 2012. The top 5 policy types below represented 96% of the total hail loss claims during this time. The policy type “Personal Property Homeowners” was the top policy type with 1,292,733, or 64% of the total number of hail loss claims between 2010 and 2012.

Note: Percentages have been rounded to the nearest whole number.

Policy Type 2010 2011 2012 Total % of US Policy Type Total

Personal Prop. Homeowners (PPHO) 351,959 483,427 457,347 1,292,733 64%

Personal Auto (PAPP) 51,345 111,666 322,719 485,730 24%

Commercial Property (CPMP) 18,388 27,724 28,932 75,044 4%

Personal Prop. Mobile Home (PPMH) 16,758 22,830 12,323 51,911 3%

Personal Prop. Fire (PPFR) 6,857 10,450 8,385 25,692 1%

Yearly Top 5 Policy Totals 445,307 656,097 829,706 1,931,110

Top 5: Percent of Yearly Total 95% 95% 96% 96%

Hail Loss Claims 2010 - 2012: Top 5 Hail Loss Policy Types

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The following graph shows hail loss claims by policy type from 2010 through 2012.

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Section 2: United States Hail Loss QCs

A total of 3,829 QCs*, with a loss type of “hail”, referred between January 1, 2010 and December 31, 2012, were analyzed. These QCs are displayed, per referral month, in the table and graph below. Hail loss QCs decreased 4% between 2010 and 2011, but then increased 4% between 2011 and 2012.

Hail Loss QCs By Referral Month The following table shows hail loss QCs by month of loss from 2010 through 2012. Similar to hail loss claims, the majority of QCs occur in the spring and summer months.

Note: Percentages have been rounded to the nearest whole number. *QCs during this submission time frame may have had a Date of Loss prior to 2010.

Month 2010 2011 2012 Monthly Average

January 55 112 80 82

February 62 69 65 65

March 91 72 67 77

April 79 67 93 80

May 140 120 160 140

June 165 166 169 167

July 147 116 154 139

August 129 153 141 141

September 138 115 74 109

October 104 102 135 114

November 104 98 91 98

December 77 54 65 65

Totals 1291 1244 1294

Yearly Percent Change - -4% 4%

Hail Loss QCs 2010 - 2012: By Month of Referral

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The following graph shows hail loss QCs by referral month from 2010 through 2012.

Hail Loss QCs By Loss State The following table represents the top 10 loss states with the largest combined total of hail loss QCs between 2010 and 2012. The top 10 states represented 76% of the total hail loss QCs during this timeframe. Texas was the top state with 1,053 QCs, or 28% of the total number of QCs between 2010 and 2012.

Note: Percentages have been rounded to the nearest whole number.

2010 2011 2012 Total State % of US QC Hail Claim Total

Texas 320 293 440 1,053 28%

Illinois 204 143 154 501 13%

Colorado 138 101 73 312 8%

Arizona 43 141 30 214 6%

Oklahoma 89 35 66 190 5%

Missouri 25 51 61 137 4%

Georgia 91 23 18 132 3%

Minnesota 50 46 36 132 3%

Louisiana 48 59 17 124 3%

South Carolina 57 37 26 120 3%

Yearly Top 10 QC State Totals 1,065 929 921 2,915

Top 10: Percent of Yearly Total 82% 75% 71% 76%

Hail Loss Claims 2010 - 2012: Top 10 Hail Loss QC States

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The following graph shows hail loss QCs by state from 2010 through 2012.

Hail Loss QCs By Policy Type The following table represents the top 5 policy types identified in hail loss QCs from 2010 through 2012. The policy type “Personal Property Homeowners” was the top policy type with 2,546 QCs, or 66% of the total number of hail loss QCs between 2010 and 2012.

Note: Percentages have been rounded to the nearest whole number.

2010 2011 2012 Total % of US QC Policy Type Total

Personal Prop. Homeowners (PPHO) 944 745 857 2,546 66%

Personal Auto (PAPP) 269 385 354 1,008 26%

Personal Prop. Fire (PPFR) 34 29 9 72 2%

Personal Prop. Other (PPOP) 10 36 13 59 2%

Commercial Property (CPMP) 3 12 37 52 1%

Yearly Top 5 Policy QC Totals 1,260 1,207 1,270 3,737

Top 5: Percent of Yearly Total 98% 97% 98% 98%

Hail Loss Claims 2010 - 2012: Top 5 Hail Loss QC Policy Types

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The following graph shows hail loss QCs by policy type from 2010 through 2012.

Hail Loss QCs By Referral Reason The following table represents the top 5 referral reasons identified in hail loss QCs from 2010 through 2012. The referral reason “Hail Damage” was the top referral reason with 3,187 claims from 2010 through 2012 in which that referral reason was used. It should be noted that each QC must have at least 1 referral reason listed, but may contain up to 7 referral reasons total.

Referral Reasons 2010 2011 2012 Total

Hail Damage 1090 1033 1064 3187

Vendor Fraud 291 174 235 700

Catastrophe (Hurricane, Tornado, Hail, Wind, Fire) 190 147 182 519

Prior Loss/Damage 172 140 189 501

Inflated Damage 127 197 155 479

Yearly Top 5 QC Referral Reason Totals 1,870 1,691 1,825 5,386

Top 5: Percent of Yearly Total 81% 75% 76% 78%

Hail Loss Claims 2010 - 2012: Top 5 Hail Loss QC Referral Reasons