We are seeing more weather related claims in Auto and Home Insurance due to severe weather across the nation compared to five or ten years ago. Because of this, we have to be proactive during the quoting process and spend time educating customers on their coverages. We look at the zip codes and any current or upcoming storms and we use claims history to help determine the risk.
At PuroClean, a notable climate-related risk we've had to adapt to is the increasing frequency and severity of water damage due to extreme weather events. This shift in climate patterns has made it necessary to adjust our underwriting approach by factoring in more localized weather patterns and risk assessments. We now incorporate real-time data on weather conditions and flood risks to better assess potential claims. I recommend that insurers adopt a similar proactive approach, using advanced data analytics to predict and price these risks more accurately, while ensuring flexibility to adjust policies based on evolving environmental factors.
Marketing coordinator at My Accurate Home and Commercial Services
Answered 2 months ago
When we first experienced the speed at which a freeze or a wind could become six figures in the damages of several properties the climate risk ceased to be a theoretical problem. The experience of rebuilding houses and companies in the wake of devastating storms in Texas in conjunction with Accurate Homes and Commercial Services made us reexamine the concept of underwriting. Homes with marginal attic insulation, which have older flashing about chimneys or low-slope roofs with patch membranes are not considered as being of standard risk anymore. These are foreseeable loss centres. Now we are buying and writing policies more selectively regarding the age of the roof, design of drainage and recorded improvements, and we demand to see some photos of vital parts before we bind. My plan that I can suggest to other insurers is not hard, yet the one that is frequently missed: link underwriting credits to proven resilience improvements. Give quantifiable discounts to impact rated shingling, enhanced underlayment, attic ventilation and certified foundation drainage repairs. A basic upgrade of the roof can save a 40000 claim and the pricing should reflect the calculations. When the underwriters collaborate with reputable contractors, when conducting pre-bind inspections, they get a real-life knowledge about the quality of the builds rather than just using past loss information. Once the construction detail is considered in the underwriting instead of merely using the ZIP code averages, the loss ratios will stabilize and the clients will know what they must do exactly to reduce their risk profile.
Now a couple of years back due to the extended droughts in South Texas, land and property risk was completely redesigning our thoughts about the subject. The case of changing soil conditions at the Santa Cruz Properties, we observed first hand the impacts of changing soil conditions on foundations on residential houses and owner-financed houses. Swollen clay soils shrank during dry periods and then violently swelled once good rainfall fell and this caused slabs to move, broke plumbing lines and cost to repair in the millions of dollars ranging between 12000 to 25000. That trend required further examination of geotechnical information to allow financing or long-term insurability assessment. Historic averages can no longer be used as a source of underwriting. Soil reports, elevation certificates, drainage plans and even vegetation patterns are much more important than they were ten years ago due to climate volatility. The approach that I would suggest is the incorporation of micro-regional environmental data into the underwriting models rather than the use of county-level risk scores by themselves. The exposure is better understood through parcel-level floodplain overlays, soil composition maps and with historical data of moisture fluctuation. As the process of underwriting takes into consideration the behavior of the land itself when subjected to stress, pricing is more consistent to the real risk as opposed to assumptions. The move cushions capital and promotes more prudent site preparation and mitigation prior to the emergence of issues.
A climate-related risk that significantly impacted our underwriting approach was the increasing frequency of extreme weather events. At Advanced Professional Accounting Services, we helped clients adjust their risk models by incorporating more dynamic and localized weather data. We shifted from a one-size-fits-all approach to considering region-specific risks, which helped clients better manage potential losses. I recommend insurers adopt similar strategies, integrating predictive weather data and updating policies regularly to reflect new climate patterns.