Reducing the Risk of Insuring the American DreamBy Jeff De Turris | January 22, 2014
Home ownership has been a long-standing dream for many Americans, but various events over the last few years have made it more problematic to buy and maintain a home. For example, more intense extreme-weather events, such as hurricanes and other natural disasters, have become concerns for those who can handle the upfront cost of buying a home but not the expense of rebuilding or repairing should the worst happen. The economic downturn has even affected regular repairs, making them more challenging to complete. On another front, the percentage of Millennials moving back in with their parents because of financial hardship is 17 points higher than was the case for their Gen X counterparts, according to a recent survey by salary data company Payscale. That return to the nest presents potential new exposures and can alter Millennial parents’ homeowners risk profiles.
In the face of such mounting challenges, insurers can help Americans fulfill their home ownership dreams. And doing so often relies on cutting-edge data and analytics tools to price more accurately and to provide incentives to reduce the potential for loss.
Using data and analytics, an insurer can more accurately evaluate the homes it covers and better assess the homeowners’ evolving risk profiles. Beyond such business benefits, insurers can create incentives that may, in fact, ultimately lower premiums and reduce claims. For instance, insurers can offer programs similar to incentive plans for drivers who attend defensive driving courses, which eliminate points from driving records and should improve skills. For homeowners, insurers can offer a program to insureds who get an education about lurking risks and take steps to mitigate future losses. Addressing issues from aging roofs to washing machine hose connections and hot water heaters, insurers can provide discounts or lower deductibles for attendees and, in turn, potentially help reduce future losses and claims.
Insight for insurers and education for homeowners can help make the American dream of owning a home more of a reality in these volatile times. For more information about how insurance companies can reduce their risk and support their customers, check out my recent article in Verisk Review.
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