39% of all home insurance claims in 2020 because of catastrophic climate – Fortunly Information
The US home insurance market is going through some troubling times due to the deteriorating weather, according to the sixth edition of LexisNexis' annual Home Trends Report. The report shows that forest fires, floods and cyclones were the main causes of damage to the home insurance industry.
With a 6% year-over-year increase in all hazards, 39% is the highest percentage this industry has struggled with in the past six years. The increase follows an upward trend in claims costs over the past six years. The report also shows that this surge is likely to continue throughout 2021.
These increases were more pronounced in some states and less worrying in others. Nevertheless, good household contents insurance would have been an advantage in all of them in 2020. The LexisNexis report showed Louisiana as the state with the highest cost of claims in 2020. This is due to the active hurricane season and is expected to increase in 2021 due to Hurricane Ida. On a broader five-year scale, Colorado and Nebraska share first place. These two countries recorded the greatest losses in the period 2015-2020.
George Hosfield, Senior Director of Home Insurance at LexisNexis Risk Solutions, said, “As catastrophic claims drive losses and reinsurance costs so high, it is imperative that insurers have the latest risk-trending data and an analytics partner who understands how Trends by hazard change over time. "
The report also provides additional information on the cost of damage caused by disasters. The frequency of wind-related damage increased by 42% and the damage costs by 63%. At the same time, the 2020 forest fire season was the most active on record, with the proportions of losses associated with it increasing exponentially. California accounted for a significant portion of the damage costs associated with fire and lightning damage, accounting for 37.2% of all catastrophe claims in 2020.
Several disaster-related losses remained constant or decreased in 2020. The cost and severity of hail damage decreased in 2020. Non-weather related water damage also decreased compared to 2019 as people stayed at home due to COVID-19.