Monthly Archives: September 2019

Homeowners Insurance

Managing your insurance claim after disaster

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Lynne McChristian

By Lynne McChristian, I.I.I. Media Spokesperson and Non-resident Scholar 

If Hurricane Dorian left its imprint on your home or business, you’ve likely already started the claims process with a call to your insurer. Knowing what happens next will be helpful as the recovery begins.

The insurance claims process is indeed a process. There are steps involved and requirements from both the policyholder and the insurance company. Most people have never had to file an insurance claim of any sort. And if they had, it might have been an automobile accident claim, which can be far less complex that one that involves damage to something as large and costly as a home and whatever is inside it.

After a widespread natural disaster, insurers take a triage approach to claims handling, and that means those people who suffered the most damaging losses are seen first. Obviously, everyone with damage wants to be seen promptly, yet taking care of people in order of damage is what serves those most in need.

After you report a claim, someone will be sent out to appraise the damage. You might have more than one insurance claims professional visit, as there is separate expertise involved – depending on the damage you reported. You might have someone look at the structure, an additional claims adjuster for the contents damage, and then a flood damage claims expert visit your property, if you have flood insurance protection. Some of these insurance professionals may work directly for your insurer, while others are hired as independent contractors to give your claim faster attention. Tip: Get a business card and cellphone number for every person who appraises the damage, so you can follow up.

If your home is so badly damaged that you cannot live in it, you may get a check on the spot from your claims adjuster. This is not a settlement check. It is coverage that is part of a standard homeowners policy, called Additional Living Expense. It covers the extra expenses you’ll have if you must live elsewhere while your home is repaired or rebuilt.

Above all else, keep organized and retain all your receipts. Temporary repairs you made to prevent further damage are covered under your policy. You will want to keep the process rolling to return to normal – and insurers want that, too.

 

Insurers and the Economy

Employment Trends in the Insurance Industry

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Dr. Steven Weisbart

By Dr. Steven Weisbart, Chief Economist, Insurance Information Institute

On September 6, 2019, the U.S. Bureau of Labor Statistics announced that the U.S. economy had added 130,000 jobs (seasonally-adjusted) in August; and more than one-and-a-quarter million nonfarm jobs (actually 1,266,000) through the first eight months of 2019.[1]

Nonfarm employment has risen every month since October 2010—107 consecutive months and counting. Not every sector or industry has consistently added jobs in that span. Indeed, the diversity of the economy has seen robust job growth in some areas that offsets job losses in other areas. Job growth in the immediate wake of the Great Recession was to be expected but the trends in job growth and its persistence in recent years is surprising.

The insurance industry is a case in point. The insurance subindustry with the strongest employment gains in recent years is — not surprisingly—health and medical expense insurers, given the enactment and implementation of the Affordable Care Act. But other insurance subindustries have shown unusual employment trends. For example, as Table 1 shows, both the property/casualty (P/C) and the life/annuity subindustries have generally shed employees.

Source: U.S. Bureau of Labor Statistics

Perhaps the most surprising row in Table 1 is the Agents & Brokers line. Pundits have been predicting for years that the agent/broker distribution channel is about to be replaced by newer methods of distribution. Obviously, that time has not come yet.

As for the P/C and life/annuity carriers, one might assume that the reductions result from automating routine functions, as has been the case in non-insurance industries, such as manufacturing. If this is the explanation, it translates to increased productivity (more work done with fewer employees), which is obviously a good thing.

[1]Two caveats pertain to this number: first, the July and August numbers are preliminary and are likely to be revised—often slightly—up or down, in the coming two months. Second, the overall benchmark revision, to take effect next winter, is likely to trim half a million jobs from the count for 2019, based on data from the Census Bureau. Even with these adjustments, employment kept growing in 2019.

Floods

Nearly 80 percent of homeowners in coastal Carolinas uninsured for flood

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As Hurricane Dorian churns northward off the coast of South Carolina as a Category 2 storm, the National Hurricane Center continues to forecast dangerous storm surge conditions through the Carolinas, up the coast into Virginia, as of 11 a.m. September 5.

I.I.I. infographic based on Aon estimates of NFIP data

Using National Flood Insurance Program policy takeup rates as estimated by Aon, the six coastal counties in South Carolina average a 28 percent flood insurance takeup rate, compared to a 16 percent takeup rate for the 21 coastal counties in North Carolina. Dare County in North Carolina had the highest takeup rate of both states, with 61 percent, and Hertford County had the lowest in the two states, at 1.0 percent. Overall South Carolina has 204,372 total policies in force, with 2,284,722 housing units statewide. North Carolina has 132,983 policies in force for 4,622,575 housing units statewide.

The graphic below shows the probability of storm-induced flooding for the Carolina coast as of September 5 at 2 p.m. eastern.
For up-to-date flood probability click here.

USGS Coastal Change Hazards Portal

More flood insurance facts and statistics from the I.I.I. are available here.

Disaster Preparedness

Hurricane Dorian Update: September 4, 2019

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As of early afternoon on September 4 Hurricane Dorian was approximately 100 miles off the east coast of Florida. The National Hurricane Center reported that Hurricane Dorian would likely move slowly up the Florida coast to Georgia and the Carolinas. While the storm’s intensity has declined since it struck the Bahamas as a Category 5 hurricane, Dorian is now classified as a Category 2 hurricane with sustained winds of 105 mph.

Federal emergency declarations are in effect for Florida, Georgia, South Carolina and North Carolina, and the governor of Virginia also declared a state of emergency. Dorian is expected to maintain its current intensity for the next few days, and forecasters said that those in Northeast Florida to the Carolinas should be on alert for the possibility of destructive winds and flooding from heavy rains or storm surges.

Dr. Phil Klotzbach, a meteorologist at Colorado State University and Insurance Information Institute non-resident scholar, is providing regular updates on Dorian via Twitter. He said that the storm has now generated the ninth-most accumulated cyclone energy by an Atlantic hurricane named during August in the satellite era (since 1966).

In a Fox Business interview, Michael Barry, senior vice president and head of media relations and public affairs at the Insurance Information Institute, said,“The industry is very well capitalized and has the financial wherewithal to pay whatever claims comes its way. Of course, right now, we’re looking at the priority of making sure everybody’s customers are safe and sound.”

An Artemis blog post said that even if Dorian remains just offshore, some sources expect a low-single digit billions market loss from the hurricane, just from wind and surge damage along its track. That figure would rise with every mile closer to shore the eye of Hurricane Dorian comes.. Any wobble west onto shore or a full landfall could raise the potential insurance, reinsurance and insurance-linked securities (ILS) market impact significantly.

Recovery from Dorian in the Bahamas and other islands of the Caribbean that were impacted is expected to be slow because most of the damage caused by the storm is not covered by insurance. In a Wall Street Journal article, Steve Bowen, a meteorologist and head of catastrophe insights at Aon plc, said that commercial businesses have the highest levels of insurance penetration in the Bahamas, while many individuals lack coverage.

Jonny Urwin, an analyst with UBS Group AG, said it estimates that insured damage in the Bahamas could be between $500 million and $1 billion. For the storm overall, UBS projects that the total insured losses from Dorian could be between $5 billion and $10 billion, basing its estimate on a comparison with Hurricane Matthew, which followed a similar path in 2016.