Susan Smith has worked as an editor and writer in the technology industry for over 16 years. As an editor she has been responsible for the launch of a number of technology trade publications, both in print and online. Currently, Susan is the Editor of GISCafe and AECCafe, as well as those sites’ newsletters and blogs. She writes on a number of topics, including but not limited to geospatial, architecture, engineering and construction. As many technologies evolve and occasionally merge, Susan finds herself uniquely situated to be able to cover diverse topics with facility. « Less
Susan Smith has worked as an editor and writer in the technology industry for over 16 years. As an editor she has been responsible for the launch of a number of technology trade publications, both in print and online. Currently, Susan is the Editor of GISCafe and AECCafe, as well as those sites’ … More »
CoreLogic Releases 2019 Insurance Coverage Adequacy Report, in Response to Increased Natural Hazards in U.S.
April 18th, 2019 by Susan Smith
The U.S. has seen an increase in the number of natural disasters between the years 2016 and 2018. The resulting “underinsurance issues” have kept analytics and data-enabled solutions providers very busy with analyzing the new wave of areas that would be better served by increased natural hazard coverage.
CoreLogic®, a leading global property information, analytics and data-enabled solutions provider, released its newest analysis, the 2019 Insurance Coverage Adequacy Report, which shows increases in reconstruction costs in certain disaster-prone areas range from 5.6 percent to 7.6 percent from 2016 to 2018. According to this report, CoreLogic examines potential underinsurance issues in four regional scenarios of the U.S. with exposure to natural hazards: The Northeast Atlantic and Gulf Coast regions with hurricane-related storm surge risk; California with wildfire risk; and Oklahoma with tornado risk.
Tom Larsen, content strategy principal for Insurance and Spatial Solutions, and Guy Kopperud, industry solutions principal for Insurance and Spatial Solutions, contributed to the following interview with GISCafe Voice.
Most catastrophic losses are covered under a standard homeowners policy. Some hazards, such as earthquakes and flooding, require separate coverage. The “Underinsurance” referenced in the 2019 Coverage Adequacy Report, refers to those policyholders that have a homeowners policy, but may be underinsured because reconstruction costs (building and labor) has risen and therefore, the Reconstruction Cost Value (or Coverage A) within their policy may not be enough to rebuild if coverage hasn’t been updated in the past two years. See chart of California reconstruction costs below.
Top carriers leverage our world-class natural hazards solutions to identify the likelihood of a property being affected by a natural hazard. In the case of flooding, the U.S. has a mandatory flood insurance requirement for homeowners inside FEMA-designated Special Flood Hazard Areas (SFHA) which identify high-frequency flood risk zones. Outside of the SFHA, the purchase of flood insurance is optional and rare. For example, CoreLogic analytics following Hurricane Harvey showed that more than 70% of the flood damage occurred to homes outside of the SFHA – highlighting that the choice to insure for flood is rare even in Houston. CoreLogic is supporting the Federal Emergency Management Agency (FEMA), the National Flood Insurance Program (NFIP), the Write-Your-Own (WYO) insurers and their clients with risk data and analytics to support a larger flood insurance market.
Well first, make sure your Coverage A is current and accurate. Then, check with your agent and/or carrier about any hazard risks that the property may be at risk for that are not covered under a standard policy.
Our mission at CoreLogic Insurance Solutions is to help the insurance industry ensure that property owners can protect and restore their property in the event of loss. The reason we published this report is to bring the issue of underinsurance forefront so that property owners ARE protected and CAN rebuild after loss.
Yes, FEMA does provide a certain level of disaster relief, but usually not nearly enough to rebuild if the property owner does not have flood insurance. For more information on specific events, we direct consumers to the FEMA website.
CoreLogic provides the data and analytical foundation for governments and insurers to promote resilience in all communities.
The objective in publishing the report is to help consumers and the real estate industry be sensitive to the effects of underinsurance. Losing a home is a devasting consequence of natural disasters which is why the ability to restore and/or rebuild a home is so important; and for most, the only way to do that is to ensure coverage is adequate and current.
From company materials:
Data from the 2019 Insurance Coverage Adequacy Report underscores the need for insurers to ensure homeowners carry the proper amount and type of coverage that is based on updated reconstruction cost values which also includes the variation of labor by market. The report also analyzes the impact of underinsurance on the lending industry through an increase in loan delinquencies following natural hazards.
Underinsurance figures are based on an analysis of increased reconstruction costs over just a two-year period for homes that are at very high-to-extreme risk of being destroyed or even partially destroyed in the event of a natural disaster. Highlights include:
Delinquency rates spike following natural hazard events. Following 2017’s hurricanes Harvey, Irma and Maria, delinquency rates on home mortgages tripled in the Houston, Texas and Cape Coral, Florida metro areas and quadrupled in San Juan, Puerto Rico.
For more information, read the full 2019 Insurance Coverage Adequacy Report, which includes charts and figures.
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