Today Is National Insurance Awareness Day

National Insurance Awareness Day on June 28 is meant as a reminder for individuals, families and businesses to review their insurance policies and take steps to prevent being underinsured.

The American Property Casualty Insurance Association (APCIA) used the occasion to remind homeowners to review and update their insurance coverage to account for high inflation and increased building costs. A recent APCIA/Harris Poll survey found that a majority of insured homeowners have not taken important steps to ensure their insurance coverage is keeping pace with rising inflation and increased building costs, which could leave policyholders underinsured if catastrophe strikes.

Most Homeowners Underinsured for Trends in Inflation, Building Costs: APCIA

“With inflation hitting a 40 year high in May and building costs remaining elevated, having enough insurance coverage if disaster strikes should be a serious concern for homeowners,” said Jeffrey Brewer, vice president of public affairs for APCIA. “Yet only 30 percent of insured homeowners have purchased more insurance or increased coverage limits to compensate for rising building costs, according to APCIA’s recent survey.”

With a well-above average Atlantic hurricane season predicted and high wildfire risk due to dry conditions, homeowners need to be prepared for the worst-case scenario, added Brewer. Underinsurance also occurs when a property is insured for the market value, which is what it can be sold for, instead of the cost to repair or replace the structure, which can often be higher than market value.

Insurtech platform Matic used June 28 to release its mid-year premium trends report. Its findings from aggregated data from a random sample of 70,000 insurance policies and 5.4 million quoted properties, showed home insurance premiums in the U.S. are rising faster than ever before – increasing at a record rate of 5.5% between June 2021 and May 2022.

A premium increase of 5.5% impacts homeowners by an extra $68 on average for a 12-month policy. Increases are driven by the rising cost of building materials, skilled labor shortage, and an uptick in severe climate and weather-related disasters, are not expected to slow down any time soon. Record-high inflation is also contributing to the growing cost to rebuild a home, Matic said.

“Insurance carriers look at many factors when deciding on rates,” said Ben Madick, CEO and co-founder of Matic Insurance. “Insurance-based credit score is one of those factors, along with someone’s history of filing claims. However, homeowners are now being universally impacted by rising rates, regardless of each person’s unique situation. The increasing severity and frequency of natural disasters and the soaring cost of construction are contributing to huge increases in replacement costs, which is leading to the high premium increases we’re witnessing. Interestingly, we’re seeing the cost of homeowners insurance rise even faster than inflation.”

Brian Sarisky, chief underwriting officer of commercial lines at Selective Insurance, said a recent poll by the company revealed nearly 1 in 4 business owners do not have an insurance policy on their business. The insurer offered tips to evaluate insurance needs.

The study also found that two in five business owners (38%) don’t fully understand their insurance coverage. “Awareness brings peace of mind – business owners need to take the time to review their policy and discuss it with their independent agent to determine whether there are exposures that need further attention,” Sarisky said.

AmTrust Financial noted the day is a timely reminder for nonprofits in particular as July 1 is one of the biggest days on the calendar year for nonprofit and human service businesses to renew their insurance policies.

The day might also be observed by spreading awareness of insurance as a career opportunity.

According to the U.S. Chamber of commerce, over the next 15 years, 50% of the current insurance workforce will retire, opening up more than 400,000 positions, in an industry where less than 25% of the workforce is under the age of 35.

“As the business of assessing risk, underwriting, and selling insurance becomes more dependent on technology, insurers must find ways to attract tech-savvy talent across all departments, not just for historically back-office I.T. roles,” the Chamber said in a workforce report.

National Insurance Awareness Day has been observed for several years. One of the earliest references appeared in an insurance agency post in 2013.