Be ready. That’s the overarching theme for Hurricane Preparedness Week, which occurs May 1-7 this year. Over the years during this week, insurance carriers have filled their social media channels and customer communications with tips about preparing for the upcoming hurricane season, including the need to double-check their home insurance policies. In the era of COVID-19, however, supply chain disruptions and rising repair costs have created a renewed sense of urgency for pre-season hurricane preparations.
Call it “Pandemicane-preparedness”
While COVID is certainly not the first global disaster to cause supply chain disruptions, it has created unique situations – especially for homeowners. When America’s workforce was largely moved to home offices, homeowners naturally decided to use their time at home to take care of all those renovation projects that had taken a backseat. We all have stories of months-long waitlists for contractors to begin work. Labor shortages have resulted in longer repair times, often at higher costs. At the same time, pandemic-related shutdowns meant building materials became a scarce commodity. For those businesses that were able to produce materials, moving them through the global and national supply chains proved slow and costly.
What does this mean for hurricane season? In any given year, hurricanes mean increased costs and time for repairing damaged property. As we reported in the 2021 LexisNexis® U.S. Home Insurance Trends Report, the estimated cost of 22 climate disasters in the U.S. in 2020 reached $95 billion. Included in that number are the 11 Atlantic hurricanes that made landfall. Throw in a pandemic that has already strained supply chains and caused a labor shortage, and things get complicated.
Home prices and insurance
Over the last few years, home prices have skyrocketed in most areas of the country, thanks in part to historically low interest rates and relocations during the pandemic. The housing market is so competitive that many people are buying sight-unseen, paying over the asking price and in many instances, waiving home inspections. Between the increased value of the house – due to sale or renovation, and the higher costs for materials and labor needed for repairs, this could leave many consumers underinsured at a time of increased exposure during hurricane season. Similar to the increase in home market value, home repair costs have also jumped!
How can you help your insureds be prepared for the 2022 hurricane season? Well, it all comes down to the data. While we can’t predict when or where hurricanes will hit or how severe the damage will be, we can supply you with insights about homes and homeowner policies in areas that have experienced considerable losses because of past hurricanes. We can also help you better mitigate roof risks, as storms can cause significant wind damage. Knowing which homes have high risk can help you focus your underwriting efforts on insureds that need to prepare their homes and properties for potential storm damage.
Even outside of hurricane season, roof-related claims are accelerating both in frequency and severity due to extreme weather events and escalating roof repair and replacement costs. LexisNexis® Rooftop delivers a predictive roof condition score and actionable data elements through the combination of aerial photos and imagery analytics with forensic data from auto claims, home claims, weather events and property data.
Insurance carriers may also face the challenge of not having access to prior policy information during the quote and underwriting process. LexisNexis® Current Carrier® Property is a contributory database that provides participating carriers with historical information about coverage, deductibles and limits. Carriers can also proactively identify changes to households, so you can better anticipate your customers’ insurance needs.
The time prepare is now
As we head into the 2022 hurricane season, insurance carriers and homeowners are facing numerous challenges exacerbated by the COVID-19 pandemic and recent jump in home repair costs. Hurricane Preparedness Week is the perfect time to review coverage with your home insurance policyholders. Here’s a checklist to get you started:
- Coverage A limits – has the policy been updated to reflect rising home replacement costs?
- Flood insurance – does the homeowner have a policy? Many don’t realize that Coverage A does not cover flooding and they need a separate policy.
- Contents limits – due to increased product scarcity, content replacement costs are higher.
- Deductibles – per event or annual deductibles can have very different results if there are multiple events. Customers need to better understand these differences.
- Roof coverage at Replacement Cost or at Actual Cash Value? – due to increased costs, consumers should consider their best option.
Hurricane Preparedness Week is also an ideal time to help educate your home insurance policyholders on actions they can take now to strengthen their homes, such as storm shutters, window covers, yard maintenance and any necessary roof repairs.
The 2022 Atlantic hurricane season is only a month away. Just as you are helping your insureds, know that we are here to help you. Contact us today to learn more.