Insurers and homeowners can do more to limit the financial damage from the rising number of severe convective storms (SCS).

Broker Aon has released the findings from new analysis which showed that roof actual cash value (ACV) endorsements can reduce average SCS claim costs by approximately 30%, helping U.S. homeowners insurers manage rising loss costs while supporting more affordable coverage in storm-exposed regions.

The study, “Aligning Risk and Reality: Reflecting Roof Actual Cash Value in Severe Convective Storm Risk for Homeowners”, examines claims data from seven regional insurers across 77 key SCS events over the past five years, comparing otherwise similar policies with and without roof ACV terms to quantify the impact on residential losses.

It found that roof ACV can help make insurance more affordable for policyholders, with a review of 29 public rate filings in SCS-exposed states showing premium credits of up to approximately 38% for roofs at the end of their lifespan. Carriers use roof ACV to support rate adequacy while offering lower premiums in exchange for greater roof loss cost sharing.

“Insurers are on the front line of severe convective storm volatility, where hail and wind losses can quickly pressure their profitability and constrain growth,” said Steve Hofmann, CEO Americas, Reinsurance Solutions, Aon. “Aon is committed to helping this segment use better data, analytics and risk transfer strategies to improve underwriting outcomes, strengthen portfolio performance and continue growing with confidence.”

According to the report SCS has become the dominant driver of insured catastrophe loss in the U.S. From 2023 through 2025, insured losses totaled $164 billion, making those years the three highest insured-loss years on record for the peril. Rising losses have been driven largely by exposure growth, including expanding urban areas such as Dallas/Fort Worth, where population and housing counts have increased by nearly 50% since 2000, placing more ageing asphalt shingle roofs in the path of hail and wind events.

“Severe convective storms are now one of the defining challenges for the homeowners insurance market,” added Adam Dawson, director of U.S. Reinsurance Catastrophe Analytics, Aon. “As losses from hail, tornadoes and straight-line winds continue to rise, insurers are increasingly focused on understanding roof vulnerability and helping policyholders reduce loss potential before an event occurs.”

Aon’s study also identified a modelling gap for reinsurers. Most commercially available catastrophe models assume replacement-cost coverage for residential roofs and do not differentiate policies with roof ACV endorsements. As a result, modeled SCS loss costs and probable maximum losses may be overstated, particularly for hail.

This study and previous roof analyses by Aon highlight the value of more granular roof data across underwriting, pricing, claims and portfolio management. Improved insight into roof age, roof cover and roof condition can help insurers make more informed decisions about eligibility, deductibles, limits, renewal actions and mitigation strategies.

Regular maintenance, timely repairs and a better understanding of roof vulnerability can help reduce loss potential before an event occurs. For insurers, aligning coverage design with roof condition and age can support sustainable products while helping homeowners better understand ways to strengthen resilience.

“Roof age, roof cover and roof condition can provide valuable insight into risk,” added Dawson. “When insurers incorporate those factors into underwriting and pricing decisions, they can strengthen planning, evaluate mitigation opportunities and support more stable insurance markets over time.”