TOKYO -- Major insurance companies in Japan are urgently thinking of ways to prevent hail damage. Against a backdrop of abnormal weather phenomena, hailstorms are frequently occurring, and in some cases insurance payouts can climb as high as tens of billions of yen (hundreds of millions of dollars) from one incident, which can in turn push up insurance premiums. The Mainichi Shimbun took a look at the specific measures being adopted, including the introduction of hail assessment equipment developed overseas.

Sudden hailstorm

On an afternoon in late September, Kunitaka Aoki, 48, representative director of Seiho Co., a plastic molding and processing company in the suburban Tokyo city of Hachioji, near Mount Takao, was surprised by an employee's sudden announcement: "Boss! The cars have been hit badly." The vehicles parked outside were dented all over.

The company cars had been damaged by hail. At first it was raining normally, but the rain gradually grew stronger and then turned to hail. Within 10 minutes, hailstones measuring some 5 centimeters in diameter were blown down sideways by a "tornadolike gust."

The damage was enormous. The bodies of five cars in the parking lot were dented, and the windscreens and door mirrors were also smashed, completely ruining them.

The repair company the firm did business with was flooded with orders for repairs, and the firm was told it would take three to six months to fix the damage. The company building itself was damaged, with holes left in the plastic rain gutters. While the firm had auto and fire insurance, it was left several million yen (over $10,000) out of pocket.

"How could something this bad happen in one hailstorm? If this becomes an annual occurrence, we'll have to come up with some countermeasures," Aoki said.

Hail refers to pieces or chunks of ice with a diameter of 5 millimeters or more. Hailstorms tend to occur in spring and autumn, when there are large temperature differences between the ground and the upper atmosphere. Bits of ice in cumulonimbus clouds are carried up by updrafts and become larger when they collide with other pieces of ice. These large and heavy ice particles then fall to the ground without melting, sometimes at speeds of over 100 kilometers per hour, which can dent vehicles and smash the windows of homes. Such incidents are referred to as "hail disasters."

Bringing in the latest equipment from overseas

In June, Aioi Nissay Dowa Insurance Co. launched a free service in collaboration with an IT company to notify people about incoming hailstorms through an app, in addition to its existing notifications about typhoons, torrential rain and earthquakes. When hail approaches, users of the app receive notifications at least 30 minutes in advance, urging them to move to a safe place to avoid damage from hail and lightning. In July, when hailstorms hit Gunma Prefecture and other areas, a car dealership that received the app notification moved more than 20 cars -- about 10% of its stock -- and managed to save some of its vehicles.

In July, the insurance company also introduced equipment developed by an Australian company to assess hail damage by confirming the number and size of dents left in the vehicle. The equipment, standing 2.8 meters tall and 3.8 meters wide, looks like a car wash. When the vehicle passes through, multiple cameras capture images from various angles to accurately assess the damaged parts within about 90 seconds on average. Prior to this, assessors had been sent out to check the damage, which took about 40 minutes per vehicle. Because of its size, it is not easy to carry the machine around on a trailer, but if there are many cars to assess, the work can be performed efficiently. A company representative expressed hope that this would enable insurance claims to be paid out smoothly.

A sense of crisis among insurers

Other major property and casualty insurers are also taking steps to counter damage from hail. Sompo Japan Insurance Inc. conducted demonstration experiments from September to November using an app provided to companies by Chiba Prefecture-based Weathernews Inc. Sompo Japan employees and dealers put the app on their smartphones, and when the threat of hail rises, notifications are sent 30 minutes to three hours in advance. This enables the dealers to move cars indoors or place thick covers on top of them. After investigating the effectiveness of the system, the firm will consider whether to extend it to other businesses and individual users.

In June, Mitsui Sumitomo Insurance Co. also launched a service for individual automobile insurance policyholders to inform them of the danger of hailstorms through mobile text messages. When hail hit Gunma Prefecture and other areas in early July, policyholders who received the messages reportedly experienced a 25% lower damage rate than those who weren't getting them.

Tokio Marine & Nichido Fire Insurance Co. similarly plans to add hail warning notifications to its app for policyholders.

But what promoted these companies to focus on hail in the first place?

The answer is a hail disaster that occurred in June 2022 in the northern Kanto region in east Japan. Many vehicles were left dented, and over 23,000 people contacted Aioi Nissay Dowa Insurance about damage to vehicles and property.

Affected the most were vehicles. If people have auto insurance, they can file claims and have the insurance cover the cost of repairs. However, the disadvantage of filing a claim is that the insurance company will lower their "rank" determining the discount rate for their insurance premiums.

If a car dealership is hit by hail damage, it is serious. While dealership insurance with a special contract covers vehicles on display or in storage during hail, customers' vehicles, such as those under repair, are generally not covered.

Although there are some cases like this where insurers are not liable for compensation, when the amount of claims is large, it can directly affect insurers' balance sheets. In the hail disaster of June 2022, Aioi Nissay Dowa Insurance and its group company, Mitsui Sumitomo Insurance, paid out a total of 42.8 billion yen (about $278.39 million) in insurance claims. This amount exceeded the payments they forked out for typhoons and torrential rain that year.

Because of global warming, damage from hail is on the increase. A hailstorm also hit Gunma Prefecture in 2023, and the group racked up 31.9 billion yen ($207.6 million) in insurance payouts. Then in April 2024, a major hailstorm struck Hyogo Prefecture in western Japan's Kansai region, where hail disasters were considered more unlikely to occur, resulting in insurance payouts totaling 47.7 billion yen (about $310.37 million).

In January 2025, the four major non-life insurers will raise auto insurance premiums by 3.5 to 5%. They are attributing the increase to higher repair costs due to inflation and rising labor expenses, as well as the growing severity of hail and typhoon-related disasters.

A representative of Aioi Nissay Dowa Insurance commented, "If the app helps out more people, then that will ultimately lower the loss ratio for insurance payouts, and I imagine insurance premiums will also go down," and expressed hope that the hailstorm alert app would produce a "win-win" situation for companies and consumers.

The question now is what level of understanding insurers can gain from policyholders through the accumulation of safety measures.

(Japanese original by Aya Iguchi, Tokyo Business News Department)