Insurers getting smarter about severe storm risks after years of heavy losses: Howden Re

A relatively normal 2026 severe convective storm season follows several difficult years for US insurers. Howden Re's Anna Pergerson says better models, tighter coverage and more sophisticated approaches to risk are beginning to pay off.

Key points:
Insurers more prepared for 2027
Policy coverage changes help
Modelling has limitations

Insurers are becoming increasingly sophisticated in understanding and managing severe convective storm (SCS) risks, with improved catastrophe models, changes to coverage and more detailed analysis of historical losses helping the market respond to a peril that has caused significant losses in recent years.

That is the assessment of Anna Pergerson, managing director and head of catastrophe R&D at Howden Re, who believes insurers are beginning to see the benefits of changes introduced following several challenging storm seasons.

She described the 2026 season as relatively unremarkable compared with the volatility of recent years, when the market experienced both unusually active and relatively quiet periods.

“The 2026 season was really kind of a return to normal. We've had a lot of volatility lately with some very low activity seasons and some really high activity seasons, but in 2026 we seem to be running about average, which is pretty rare.”

Although she cautioned against drawing conclusions about the weather in 2027 from this year's experience, she believes insurers are now far better positioned to manage severe storms.

“The market is recovering after getting through some pretty rough years, particularly in 2023,” she told APCIA Today. “If I think about how insurers have responded and gotten smarter in terms of how they're covering the peril, adjusting their coverages and thinking about the peril and being more prepared for it, I think we're starting to see the fruits of those efforts.”

Changes to coverage

One of the most significant developments has been changes to policy coverage designed to manage storm-related losses more effectively. Pergerson highlighted limitations on cosmetic damage and greater use of actual cash value coverage rather than replacement cost as two particularly important measures.

“We've definitely seen a rise in things like coverage limits. So whether that's limitations on cosmetic damage or actual cash value coverage rather than replacement costs, those have been the two leading changes I think insurers have made that has helped them to better handle those severe storm losses,” she said.

At the same time, catastrophe modelling has improved substantially, giving insurers a stronger basis for assessing and pricing the risk.

“Risk models are a good place to start [examining exposures] but are far from perfect.”

The leading model vendors have introduced updates recently, in some cases responding quickly to feedback from insurers and additional observations from storm events. “I think those have generally been well received. They seem to reflect history better, so I think everyone has a better handle on it.”

The increased frequency of significant severe weather losses has also provided more data against which models can be tested and refined.

Beyond the models

However, Pergerson stressed that the most effective insurers are going beyond standard catastrophe models to develop their own understanding of the exposures they face. “The risk models are a good place to start, but are far from perfect,” she said.

Nor do the models necessarily reflect all the coverage limitations recently introduced by insurers. That makes it essential for carriers to reconcile model outputs with their own claims experience, underwriting changes and portfolio characteristics. “It's the carriers who are creating their own custom view of risk,” she said.

She explained Howden Re works with clients to compare historical losses with modelled outcomes, examining both average annual and peak losses from individual events. The process also involves understanding how changes in underwriting and coverage affect the relevance of past claims experience.

“The carriers who are taking a lot of time to understand that, and as their underwriting approach has changed over time, how does that change how we view the historical losses? That's what's really different.”

She said Howden Re has been working extensively with clients on severe storm risk since around 2020, when the market began experiencing a notable increase in losses. That work has increasingly focused on helping carriers develop a more individualised assessment of their exposure rather than relying exclusively on standard industry models.

Despite the progress, Pergerson sees considerable scope for further improvement, particularly in how individual storm losses are recorded and attributed.

She noted that severe weather can occur on approximately 200 days each year, making it difficult to determine precisely which event caused damage to a particular property. “One place where there's still a lot of room for improvement is in tracking losses,” she said. “You think it's easy, but when you have 200 days of severe weather per year, assigning roof damage to a particular event can be really tricky.”

She expects technology to play an increasingly important role in improving the accuracy of loss attribution, alongside continued development of catastrophe models.

For more news from the American Property Casualty Insurance Association (APCIA) click here.

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