For home insurers, the weather is more expensive as COVID measures reduce claims


Catastrophic weather events such as forest fires, hurricanes and floods caused 39% of home insurance claims in 2020 – the highest percentage in the past six years.

According to the LexisNexis Home Trends 2021 report, the cost of losses in 2020 also increased by 6% for all risks year-over-year, following the upward trend which the report says will likely continue until in 2021.

As the cost and frequency of losses for all household risks combined increased in 2020, some states were hit harder than others. Louisiana recorded the nation’s highest cost of losses in 2020 due to wind-related losses of the 2021 hurricane season.

Additionally, Colorado and Nebraska ranked first in cost of losses during the 2015-2020 period due to their location in a “hail alley” and 7-9 days of hail. every year.

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LexisNexis researchers also analyzed the impact of COVID-19 on the US home insurance market. With more people working from home, the cost of loss due to theft dropped significantly in 2020. The report notes that this may also be the result of the increased adoption of smart home security devices.

In 2020, liability risk saw a 48% drop in severity year over year, likely due to COVID-19 restrictions and social distancing measures, which led to court closures, to limited access to legal representation and increased household isolation.

Additional results, by hazard, include:

  • Wind: The frequency, cost of claims and severity of winds all increased significantly in 2020: frequency increased by 42% this year and the cost of claims by 63%. 2020 marked the biggest cost of wind loss recorded in the past six years.
  • Hail: The cost of claims and the severity of claims related to hail decreased in 2020, while the frequency remained stable. However, catastrophic losses accounted for 62% of all hail-related claims this year and the frequency of catastrophic hail-related claims has increased 9.9% year over year.
  • Fire and lightning: The most active 2020 wildfire season on record, resulted in an increase beyond 2017 and 2018 levels in the cost and severity of claims for insurers. The share of catastrophic claims has also increased. California had the greatest cost, severity and frequency of fire and lightning claims, with 37.2% of all catastrophic claims nationwide in 2020.
  • Water not related to weather: While the six-year trend for non-weather-related water claims continued to climb, 2020 saw a decrease in loss costs compared to 2019, which the report says is likely due to the causes people to spend more time at home and possibly increased use of smart devices. water leak detectors.
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The report provides home insurance data by risk and location-based information to help insurance companies assess risk and make underwriting decisions.

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“This year has already been very active in terms of hurricanes and other major storms,” said George Hosfield, senior director of home insurance at LexisNexis Risk Solutions. “We expect 2021 and the years to come will continue this trend, which means that it will be even more important for insurers to adopt new data to better assess roof risk for both new business and their business. renewal book. Insurers must be armed with the best information available about the condition of the roof to optimize coverage decisions.

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Source: LexisNexis Residential Trends Report 2021

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