THE eye-watering increases in the cost of hail insurance premiums in the wake of large claims by car dealerships in recent years is leading to a strong interest in hail netting by financiers, insurers and dealership landlords.

GoAutoNews Premium has been told that until recently, insurers of dealerships were reluctant to acknowledge the protection afforded dealer stock from hail netting because they did not understand the product and hail insurance costs were not all that onerous.

Similarly, dealers who rented their premises found it hard to interest their landlords in erecting hail netting on land the dealers did not own.

Finance companies that own dealer floorplan stock include the hail insurance fees within monthly payments and that was manageable until premiums took off.

Not anymore. As outlined in the companion article (see here) billion dollar hail events over the past 10 years have taken their toll at insurance companies with many exiting the field and the remainder having to hike premiums to recover claims.  

Justin Murray, national sales manager, NetPro Commercial Constructions

Dealers are facing premiums of $250,000 to $1 million and some dealers have had premiums increased by $1 million.

This has galvanised the minds of the industry which is now looking to hail netting to reduce claims risk and therefore significantly reduce premiums and potentially eliminate hail insurance premiums altogether.

Justin Murray, national sales manager of leading automotive hail net provider, NetPro Commercial Constructions, told GoAutoNews Premium that insurers were actively encouraging their dealers to erect hail netting as the most cost-effective way to protect stock from storm damage.

He said that some insurers were now treating, for the purposes of setting premiums, high quality knitted hail netting sold by his company as the equivalent of a tin shed for car storage.

He said it has been a long process for insurers to accept a leading role for hail nets but the advent of high premiums had created an urgency to find a way to reduce or eliminate hail damage premiums. 

Landlords were concerned as well.

“Over the past 10-15 years, I have always dealt directly with the dealerships. Now, for the first time, I am getting calls from the land owners on behalf of their dealers. 

“So to me, that’s a pretty big shift because a lot of the time the conversations we were having with the dealers is that they don’t own the land and they have to talk to their landlord. Now the landlord is actually reaching out to me and calling on behalf of their dealers. 

“The dealers are obviously saying to their landlords that they need help and that they cannot keep on doing what we’re doing and if they have to keep paying these massive insurance premiums. 

”If it wasn’t for us, a lot of the dealerships, especially the smaller ones, would be getting out because they just can’t afford this level of hail insurance.

“So there has been a big mentality shift,” he said.

Mr Murray said that the most common size coverage requests within the auto industry is between 2000 square metres and 10,000 square metres at a cost varying between $40 and $100 a square metre depending on the size of the canopy and the site conditions.

For example 10,000 square metres would cost $40 a square metre and a smaller site would be up to $100 a square metre.  Therefore a dealership paying $1 million in hail premiums would recover the netting outlay in around six months.

Mr Murray said that up until now the cost benefit of erecting hail netting over just 2000 metres would have been marginal but the level of hail premiums meant it was now worthwhile. 

Mr Murray said the netting industry had come a long way since they used standard off-the-shelf  shade cloth and connection clips which offered little benefit. 

“So with wind, rain and hail together the canopies at times can physically endure forces of up to 12 tonnes. Our protective canopies are designed to be more flexible to absorb more hail load so it actually flexes and stretches, which basically means it’s a lot better for the physical absorption of the load over the netting, the cables, the poles and the foundations. 

Mr Murray said it was important to source knitted netting which does not unravel if cut by flying debris.  The canopy may need to be re-tensioned after a massive storm but, other than that,

NetPro says it has had netting in place for 30 years.