Home Insurance Risk Stabilizing

Home insurance is a risk-based operation, and evaluating, understanding, and measuring those risks are key efforts to mitigating them. Which is why LexisNexis released its Home Trends Report, to help industry experts understand the current state of the market.

According to the report, “The second annual LexisNexis Home Trends Report identifies key insurance industry trends on a by-peril basis – wind, hail, fire, water, theft, liability, and other – so that insurance carriers can reduce risk and price policies with more precision.” Compared to 2015, peril losses were down in 2016, as was severity of those claims, although frequency of claims stood fast. In terms of total percentage, catastrophe claims amounted for 30 percent.

This year, one of the most interesting factors was that nearly half (48 percent) of all catastrophic event claims occurred in Texas and Colorado. Hail and wind accounted for most of the losses, rather than extreme weather such as tornados or hurricanes.

On a national level, hail accounted for most of the peril losses in 2016—20 percent—reaching the highest level since 2011 and costing the industry $8.4 billion. Texas accounted for nearly $4 billion of that in during March and April, which broke state records.

One of the reasons the report attributes to a downward trend in catastrophe losses, particularly in the northeast, was due to El Niño, which brought warm winds to the northeastern states.

“The report reveals that not all perils are created equally, and that even within a peril category there will be dramatic geographic differences. Every state has its own nuances,” said George Hosfield, Senior Director, Home Insurance, LexisNexis Risk Solutions. “Our historical view of how by-peril trends change over time offers carriers new insights with which they assess and price risks more accurately, ultimately edging them closer to profitability which has been difficult to maintain in the Home insurance market.”

You can find the detailed report here.