Weather, Wildfire Claims an Increasing Share of Home Insurance Losses

October 31, 2018

U.S homeowners insurers saw an increase in both the number of losses and the percentage of those losses that resulted from an extreme weather event during 2017. According to a LexisNexis Home Trends report, loss costs increased 19 percent from 2016, with catastrophic claims making up nearly 35 percent of those claims, a 5 percent jump.

Last year’s extreme weather, including Hurricanes Harvey and Irma, increased the severity and proportion of catastrophic claims for the year, with 60 percent of wind claims and water claims qualifying as a catastrophe, most notably in Texas and Florida.

“This year’s report highlights the significant impact last year’s extreme weather events had on coastal states and the resulting influx of claims,” said George Hosfield, senior director, Home Insurance, LexisNexis Risk Solutions.

Intense wildfires also affected 2017 claims data across the U.S., with fire claims increasing nationwide by 20 percent. While fire losses have continued to increase since 2012, last year saw a particularly sharp increase (70 percent) in the severity of claims due to California’s destructive October wildfires, according to Hosfield.

These fires were so significant that California accounted for 30 percent of claims in 2017, where the state typically only accounts for 10 percent of national fire loss-costs. The recorded severity was due in part to total loss claims and in part to the home high-value in the fires’ paths, LexisNexis said.

Colorado also experienced a high frequency of catastrophic losses again for all perils, particularly wind and hail, and along with California, was listed by LexisNexis as the state with the highest catastrophic losses due to extreme weather and other weather and non-weather related perils in 2017.

Other findings from the LexisNexis Home Trends Report include:

  • Wind – 2017 was the worst year for wind damage claims since 2012, with Florida and Texas seeing a significant spike in losses due to Hurricanes Harvey and Irma. While wind losses typically peak in the spring during tornado season, the extreme winds of these storms made the seasonality of this claim more variable. More than half (55 percent) of wind losses came from Texas, Florida and Georgia.
  • Hail – Hail claim frequency decreased to baseline levels from 2012 after an intense year for hail claims in 2016. Texas, which was hit with intense storms in 2016, accounted for nearly 25 percent of the hail claims in 2017, showing significant improvement. However, while frequency decreased, hail claim severity increased from 2016 to 2017, resulting in an increase in hail loss cost. High risk hail states also remained the same, with Nebraska, Colorado, South Dakota, Texas and Montana remaining in the top spots.
  • Water (Weather-Related) – Hurricanes Harvey and Irma increased weather-related water claims by four percent from 2016 to 2018, with Texas experiencing a record number of claims for the state. The 2018 hurricane season was not only severe, but active, causing the U.S. to face a six percent jump in total losses from water.

Source: LexisNexis Risk Solutions

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