Risk & Business Magazine Moody Insurance Spring 2017 - Page 27

HOME & AUTO INSURANCE Home And Auto Insurance BY: MARTHA RICCI MOODY INSURANCE Rate Challenges A s home and auto owners witness their insurance rates creep up year after year, there are preventative measures policyholders can take to minimize or even reduce their insurance costs. Given that most policy rates are affected by claim activity, it makes financial sense to take preventative measures to reduce claim activity. PREVENTATIVE MEASURES FOR HOMEOWNERS Although there is little that can be done to prevent damage to your home from natural disasters such as hurricanes, tornadoes, or floods, homeowners can take action to prevent water damage, which is a common cause of insurance claims. Because when you have insurance claims, you can be certain your insurer will respond with a rate increase at renewal time. Many of the national home insurers have begun to offer discounts to homeowners who install automatic detection devices that can help reduce insurance claims: • Water Shutoff Valve – Installing a water monitoring and shutoff system can safeguard your home from water damage that results from plumbing issues such as leaking supply lines and plumbing failures. • Humidity Sensors – The environmental conditions in your home can have a major impact on your home. Installing a humidity sensor can help homeowners detect increased humidity levels which possibly signal a water leak. • Temperature Monitoring – Installing a digital temperature monitor in your home can act as an early warning system that detects spikes in temperature, that could result in a fire, or drops in temperature, that could result in freezing pipes. CHALLENGES FOR HOME INSURERS It’s important to note that your homeowner’s insurance policy is not a roof maintenance policy or warranty. Your insurer will be unwilling to repair or replace your roof if it has been poorly maintained or has worn out its usefulness. Unfortunately, Colorado’s Front Range Urban Corridor, which happens to be located in the heart of “Hail Alley,” receives the highest frequency of unusually large hail in North America. Homeowners can easily count on experiencing catastrophic hailstorms each year as a result. Policyholders in this region should be prepared for possibly higher deductibles for wind- and hail-related claims in the future. These deductibles can be either a flat dollar deductible or based on a percentage of the home value. Most direct writers or captives are already mandating these deductibles. CHALLENGES FOR AUTO INSURERS National auto insurers are regularly filing for rate increases because of significant increases in losses paid. There are several factors that are contributing to this increase in claim payments: • New Car Purchases – According to the Associated Press, new-car sales skyrocketed in 2016 in the United States with more than 17.5 million vehicles sold. Dealerships attributed the increased car volume to low interest rates and rising employment but also recognized the allure of new technology that appears to be exciting drivers across America. • Number of Miles Driven – Lower gas prices typically leads to more driving which leads to more accidents on the nation’s highways. Of course, increases in accident claims motivate insurers to file for rate hikes to protect their bottom line. • Distracted Driving – It’s no secret that drivers have become more distracted because of cell phone use and texting while driving. According to the Centers for Disease Control and Prevention (CDC), each day eight or more people are killed and 1,161 are injured in car accidents that involve distracted drivers. • Rising Medical Costs – Auto insurers across the country are witnessing substantial increases in medical costs from policyholders and claimants. The average liability claim per accident has risen from $12,900 in 2006 to $17,024 in 2015 while claim frequency has actually dropped during that time. Moody Insurance Agency is an experienced broker who represents multiple highly rated insurance carriers. We encourage our customers and prospective customers to call with any questions and to discuss possible options. We are always here to help. + Martha brings more than 25 years of experience specializing in consultation, analysis, and coverage placement for High Net Worth individuals, families, and family offices. While her clients include individuals whose businesses are in the top of the Fortune 500, Martha is also highly knowledgeable in all areas of Property/ Casualty in the Personal Insurance market. 27