In an earlier post, we took a square look at this year's hurricane season (which is slated to be as bad as last year's, if not worse). We also looked at why severe weather events are becoming more common these days, and what that means for insurers, broadly speaking.
Now let's look at what it means for building codes.
The damage that high-impact storms can do to insured properties in coastal areas is a major consideration for the P&C firms that serve those who occupy these structures. It's also a major concern for the occupants themselves, who stand to suffer directly, and for national disaster relief teams, which clean up afterward. The price tag is enormous, to say nothing of other ramifications.
So why, in that case, are Atlantic and Gulf Coast states softening their stance on building codes?
Three months before Hurricane Irma paid a memorable visit to Florida, home builders lobbied to relax the regulatory rigor. This wasn't an uncontroversial move. Rather, it "had all the drama of a knock-down political brawl," said Christopher Flavelle at Property Casualty 360. "Powerful industries clashing. Warnings of death and destruction. And a surprise last-minute vote, delivering a sweeping reform bill to the governor’s desk."
Building codes are known to mitigate damages caused by extreme weather events. Still, despite a resistance comprised of "insurers, engineers and safety advocates who opposed the change," there is "an incredible capacity for amnesia and denial in this country," according to Julie Rochman, the head of the Insurance Institute for Business & Home Safety (IBHS). "There’s no longer the automatic assumption that codes are good."
That sentiment isn't limited to Florida. When the IBHS looked at building policies across 18 coastal states, it found that the relaxation (or even absence) of codes is endemic.
What's an insurer to do?
While the building code situation is a pointed problem, there is some pushback in the works. FEMA is pushing for stricter codes and threatening to reduce disaster aid for states that fail to put regulatory safeguards in place.
Insurers may be able to help, too. By setting premiums for property that doesn't comply with best-practice building codes, even if those codes are not mandated by the state in question, insurers can exert pressure on homebuilders to do the right thing - while also limiting their own exposure to catastrophic claims. Of course, strict, statewide building codes will be unpopular among some, but they're a commonsense measure in the face of the weather events that are becoming our new normal.
Last but not least, there are a range of technologies that may contribute to better outcomes when we’re faced with disaster damages, brought to us by insurtech. Risk and Insurance recently offered a sampling of some possibilities in that area.
In the meantime? Take a proactive stance. Keep studying the risk landscape from every possible angle. And, if you need to quickly adjust your underwriting rules, Silvervine Software will easily accommodate. Request a demo to learn more.
The FedNat Insured Web is a great tool for our insureds!
They like having a centralized location to view policy info, make payments, upload policy documents, and elect to become paperless to receive a discount.
The insureds also can file a First Notice of Loss for a claim and access exiting claim info. Silvervine recently enhanced the site which allows insureds to upload policy documents directly to their policy. The uploaded docs go directly into our workflows and save a lot of manual effort on our part.
From my visits with agents, the agents appreciate the app for the amount of time saved on having to download and attach photos directly to the policy.
The app can also reduce the amount of staff required for a busy office to fulfill underwriting requests for photos.
When training agents they are amazed at how quickly the photos attach directly to the policy. After taking photos using the app and before they make it back to their desk, the photo is already attached to the policy. They also like the ability to attach additional photos for pre-existing damage.
Customer Service is seeing an improvement with retention as the text message definitely triggers phone calls from insureds to make payments.
The insureds love the fact that we notify them on their phones because they state that sometimes they don’t receive their mail for various reasons.
The insureds are paying more attention to the texts then to their actual mail. We try to set all of our customers up on that option if we notice that they are not currently enrolled, as it builds great customer relations as well as retention.
As a company we have adopted the use of Policy Scan for all our policies, and our agents have adopted the use of the app as well.
Not only is it easy to use, there is also no more worrying about losing photos, having to store photos or photos being attached to the wrong policy.
With Policy Scan we have increased efficiency in our workflow and reduced our exposure on the risk.
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What started out writing one product, one line in one state has now grown into mulitple products, multiple lines and writing in multiple states. We have over $95 million in annualized premium in-force and we expect to grow by 20% during the next year all serviced by Silvervine.
Silvervine was our insurance software system of choice when we started the company in 2006. Silvervine enabled us to begin business within a few months of licensing the company. Today, we are one of the top 20 homeowner’s writers in Texas and SIlvervine’s solutions have been an integral part of our success.