Population is on the rise. So are property values and severe catastrophes. As a result? The insurance protection gap is growing too. Here are the details …
The population is growing. The U.S. Census Bureau predicted world population to reach 7.4 billion as of last January; the United States was estimated to comprise 4.4 percent of the total. With over 300 million people, we've grown 0.71 percent since last year. Put differently, someone is born every eight seconds; someone dies every 10 seconds.
Climate change is prompting human migration.Climate change refugees migrated to the U.S., displaced from their homes in Central America, South America, and the Caribbean. Meanwhile, climate refugees are emerging within the U.S. now, too.
The Insurance Gap
All this "makes the protection gap — the difference between total economic and insured losses — an area of great concern," said R&I contributor Michelle Kerr. The impact of the gap is in our nation's "ability to rebound from disasters, both physically and economically."
The most extreme example took place 13 years ago. Hurricane Katrina blew the numbers out of the water, with 67 percent of the losses inflicted not covered by the private market. But the trend is much larger than one fluke year. "The property insurance protection gap has risen steadily over the past 40 years," Kerr said. At least 70 percent of losses over the last 10 years were not covered.
Flood and earthquake exposures comprise the biggest gap within the United States. "Nationally, there are more than 29 million properties that are at moderate to high risk of flooding but are not subject to mandatory flood coverage because they fall outside of Special Flood Hazard Areas, according to a CoreLogic analysis," Kerr said.
As for quakes, a mega-quake on the San Andreas fault promises certain disaster any time between now and the next thirty years; even so, most affected properties remain uninsured (87-91 percent).
While increasing insurance penetration can spread disaster risk and make coverage more affordable, coverage is expensive, and households without a lot to spare aren't biting. Many property owners assume that FEMA will be there for them when the big one hits - but funding for disaster relief is on the chopping block in Congress.
Legislation could require mandatory earthquake coverage in high-risk areas; for example, something similar to the National Flood Insurance Program could help mitigate those risks.
Regulation is another area where insurers could be pushing for change. For example, in this landscape, there's no excuse for lax building codes.
Kerr suggests that new insurance models may also provide answers. For example, insurers could tie coverage to the property, not the owner, in five- or 10-year policies that would transfer with ownership, while lowering premiums for properties with features that reduce risk. Or, insurers could partner with mortgage lenders to offer low-interest loans for resilience upgrades.
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.
Silvervine’s core administration solutions easily handles multiple carriers within multiple states, including accounting, payment processing, immediate policy issuance and endorsements.
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.