Impact of 2020’s Weather on the Property Insurance Market

Impact of 2020’s Weather on the Property Insurance Market

February 04, 2021
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It’s a new year and we’re all ready to look ahead. While we move forward with new goals and plans the impact of 2020 will stay with us. Last year the United States experienced 22 separate weather events that reached or exceeded $1B in damages. Together, the 22 events reached $95B in costs. One of the top three events from the year was the August Derecho that blew over a 700-mile stretch of the Midwest from Nebraska to Indiana. A derecho is defined as a line of intense, widespread, and fast-moving windstorms stretching across a great distance and characterized by damaging winds. In Iowa, one of the hardest-hit states, winds reached 110-140 mph. The storm destroyed more than 40% of the state’s corn and soybean crop, toppled trees, and damaged structures. This event alone totaled $11B in damages and sadly caused four deaths.

Natural catastrophic losses are a key factor in property rates. On average, rates have increased between 5%-10% this year. The ongoing trend of billion dollar events will cause the insurance marketplace to carefully evaluate this risk category and make changes to the coverage options they offer.

Events that occur at the direction of Mother Nature may be outside of our control, but there are steps we can take to design an effective insurance program.

  • Review your retained risk; are you able to accept increased deductibles?
  • Ensure your building and personal property is valued accurately; when was the last time your agent conducted a replacement cost building appraisal? Have you recently conducted a replacement cost inventory of your personal property?
  • Share and document your loss prevention plans and process to demonstrate your dedication to protecting your property. For example, have you made updates to your roof, installed hail guards on your rooftop HVAC equipment, or added security cameras and video?

We’re here for you. As independent agents, we can help you navigate the insurance marketplace to find programs that support your risk management goals. It is important to have a risk management plan for today, but it is equally important to plan for the future. That is why we stay abreast of forces that may affect premium and coverage options, like billion-dollar weather events.

 

Sources

Smith, Adam B. “2020 U.S. billion-dollar weather and climate disasters in historical context.” Climate.gov, https://www.climate.gov/news-features/blogs/beyond-data/2020-us-billion-dollar-weather-and-climate-disasters-historical. Accessed 11 January 2021.

Bennett, Sukee. “Inside the derecho that pummeled the Midwest.” PBS, https://www.pbs.org/wgbh/nova/article/derecho-wind-storm-iowa/. Accessed 29 January 2021.