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.
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.