Same street, different risk: How Moody’s Exposure Enrichment reveals severe convective storm blind spots

Authors: Tom Sabbatelli-Goodyer, Director - Product Management, Moody's; Saffron Taylor, Associate Analytics and Model Analyst, Moody's

Severe convective storms (SCS) have emerged as one of the most persistent and costly perils facing the U.S. insurance market, generating annual insured losses of over $50 billion for three consecutive years.

These high annual aggregate losses come from a combination of single catastrophic events, such as an SCS outbreak in March 2025 that caused over $8 billion in insured losses across 26 states, and smaller yet frequent events throughout the year.

In previous blogs, we introduced Moody’s Exposure Enrichment as a new capability within Enhanced Risk Data on Moody’s Intelligent Risk Platform™ and also how enriched data transforms hurricane risk modeling at the location level.

We recently detailed the breakthrough science behind the Moody’s RMS™ North America Severe Convective Storm HD Models, designed to capture hail, straight-line wind, derecho, and tornado risk with unprecedented fidelity.

This blog brings these two innovations together—showing what happens when high-definition (HD) SCS modeling meets high-quality enriched exposure data.

Enrichment delivers secondary modifiers with primary impact

To produce a more certain risk assessment, properties analyzed by catastrophe models must be accurately described. Descriptors are segmented into primary and secondary modifiers:

Primary modifiers, such as construction type and occupancy, determine the property’s main structural response to a hazard, such as wind gusts or hailstorms. The response assumes that the remaining structural characteristics follow an industry or regional average.

Secondary modifiers, when added to catastrophe model exposure, define the property’s alignment with—or differentiation from—the industry average and help refine the loss projection.

As discussed in previous blogs, Moody’s RMS North America SCS HD Models include a recalibration of our secondary modifiers library, which, despite their name, can modify a location’s expected loss by a significant amount. Many of these characteristics are delivered with Exposure Enrichment: Roof age, roof maintenance, roof geometry, roof system, cladding system, appurtenant structures, tree density, garaging, and roof equipment.

A modest portfolio credit that masks significant repricing

To understand the impact of enrichment on modeled losses, we used a test portfolio of one million U.S. residential properties enhanced with secondary characteristics to compare Moody’s RMS U.S. Severe Convective Storm HD Model results for the ‘enhanced’ and ‘unknown’ cases.

After enhancement, portfolio-level average annual loss (AAL) decreased by approximately 5 percent, but this is just one case; another portfolio might lead to a more significant change.

A closer examination shows a portfolio change made of many location-level AAL increases and decreases, with a third of locations changing AAL by more than 20% in either direction.

The more powerful opportunity lies in distinguishing between decreasing and increasing locations.

Figure 1: Impact of Exposure Enrichment: Location-level AAL percentage change distribution in Moody’s RMS U.S. Severe Convective Storm HD Model (All Perils)

Texas: Where repeated hail events shape the building stock

Texas provides a compelling regional illustration; in 2023, over 2 million homes in the state were struck by hail at least one inch in diameter. In fact, the Dallas–Fort Worth (D-FW) area has experienced major damaging hail events in 2012, 2016, and 2019. Years of repeated hail events mean damaged roofs are being replaced.

Moody’s Exposure Enrichment captures this trend. In our test portfolio, more than two-thirds of locations have excellent roof condition, reflecting roofs recently replaced. Further, 90 percent of the properties have brick veneer cladding, which is more resistant to hail damage than vinyl siding.

Consequently, county-level AAL credits from exposure enhancement for these properties range from 14 to 17 percent.

Yet within the same state, locations with older roofs and more vulnerable cladding show the opposite—loss increases. Being able to distinguish between the two presents an opportunity.

Figure 2: Impact of Exposure Enrichment: Location-level AAL percentage change distribution in Moody’s RMS US Severe Convective Storm HD Model (All Perils), Texas Only

The difference between a loss and no claim: The impact of Exposure Enrichment and HD vulnerability modeling

Enhancement is not just about refining the loss magnitude during an event—it can influence whether a claim could be filed in the first place. Moody’s HD framework improves the realism of SCS loss projections by adding two key vulnerability modeling parameters: the probability of no claim and the probability of total loss.

During a hail or wind event, the probability of ‘no claim’ is critical to ensure realistic location-level loss quantification. For example, a hailstorm is often defined by the size of its largest hailstone, but a vast majority of the hailstones are far smaller than that maximum. When small hailstones fall, it is unlikely that the damage would lead to a claim, especially with more impact-resistant roofs.

Our results show that the value of using leading modeling science for catastrophe models and roof conditioning is deeper insights for catastrophe modeling teams, ultimately driving improved business outcomes for clients.

Exposure Enrichment offers the intelligence needed to accurately characterize roof type and condition, while our high-definition models can assign appropriate credits or penalties based on these attributes.

From insight to action

The combination of the Moody’s RMS North America Severe Convective Storm HD Models and Exposure Enrichment delivers a step change in hail, tornado, and straight-line wind risk assessment:

• Insurers gain the ability to identify mispriced locations, reward mitigation, and communicate risk transparently to policyholders and regulators.
• Reinsurers can better assess portfolio quality and underwriting strategies across cedants.
• Brokers can provide improved advice on portfolio composition and risk-transfer strategy.

By explicitly linking building characteristics and mitigation measures to modeled outcomes, the market moves closer to pricing that reflects the actual condition of the built environment—not just its age or address.

With Moody’s uniquely mapping between enriched exposure data and Moody’s RMS catastrophe models, clients now have access to a more complete, consistent, and realistic foundation for understanding severe convective storm risk.

If you’d like to learn more about how Enhanced Risk Data capabilities combined with our North Atlantic hurricane models improve the modeled loss accuracy across residential properties in Florida, please read our blog post entitled “When better models meet better data: Realizing a longstanding market vision.”

To learn more about Enhanced Risk Data and Exposure Enrichment, click here, or to request a technical briefing, contact your Moody’s representative.