Five emerging risk trends facing homeowners (and how we're addressing them)By William C. Schlager, Sandee Perfetto | April 26, 2021
As a famous truant once observed, "life moves pretty fast." Today's homeowner risks include technologies that were barely invented a decade ago, demographic trends that hadn't fully emerged, and a plant that (depending on where you live) may no longer get you in trouble.
To help insurers tackle these evolving risks, we've begun filing one of the most significant updates to the ISO Homeowners program in a decade. It's a sweeping update, addressing a range of new exposures, enhancing language around existing homeowners risks, and introducing new optional endorsements, new rules, and loss costs.
Let's examine five of the emerging risks we're addressing with this update.
- The rise of millennials
Millennials (those born between 1981-1996) are now the largest generational demographic in the United States.1 For many insurers, millennials can be an attractive market due to their large size and spending power.2
Verisk surveyed over 600 millennial insurance buyers to help inform an entirely new renters policy form filed as a part of the ISO Homeowners update. This is a policy designed for the types of exposures that may be more prevalent among millennials. For example, we've included language to address home-sharing host activities and bed bug remediation (a potential side effect of said hosting). We've kept the form streamlined for insurers by incorporating loss settlements on a replacement cost basis with an open perils cause of loss so that insurers can schedule excluded perils if they choose.
- E-bikes and e-scooters
Last year, pandemic-induced demand drove electric bike (e-bike) sales to record levels. 3 But with more riders comes more risk.
To help insurers address these vehicles' proliferation, we're making several critical enhancements to the ISO Homeowners program. First, the definition of "motorized vehicle" will now expressly address motorized bikes and scooters (they don't have to only be self-propelled to fit the definition). Second, we're revising a liability endorsement to include motorized bicycles/scooters that the insured owns (when they're at the insured's residence). Because many motorized bikes and scooters can hit speeds in excess of 20 miles per hour (mph), we're increasing the miles-per-hour threshold in that endorsement from the original 15 mph to 28 mph.4,5
But what about another increasingly common e-bike/e-scooter exposure: Ride-sharing/rental services? According to the National Association of City Transportation Officials, there were over 136 million trips on ride-sharing bikes and scooters in 2019 (the last year for which data is available), a growth of 60 percent over 2018.6 While the pandemic depressed ridership in 2020, there's every expectation that growth will continue as life returns to normal. And the risk of injury to users of these shared micro-mobility services can be high.
The ISO Homeowners update will include a new, optional endorsement that’s designed to allow insurers to exclude non-owned motorized bicycle and motorized scooter exposures.
At present, 35 states have passed laws designed to permit the use of medical marijuana, and 15 have done so related to the use of recreational marijuana.7 The odds are growing that your insureds could have cannabis property and liability risk exposures, even if they live in a state that hasn’t yet passed such a law. For example, what if your insured travels to another state where state law allows for recreational use of marijuana? Or, what if your insureds' child attends college in such a state?
To help provide greater flexibility concerning those risks, we're revising the ISO Homeowners program to explicitly remove certain cannabis exposures from coverage in our base policy forms while adding new, optional endorsements to provide a tool for insurers to write these risks under both property and liability coverages.
- Drones and hobby watercraft
Consumer drones have various uses—from racing to photography—and last year, sales of these devices more than doubled.8 As more households get their hands on these aerial accoutrements, they may be accumulating property and liability exposures. To help address this, the ISO Homeowners program is adding a new property coverage sublimit of $2,000 for drones and model aircraft, with higher limits available for purchase, while at the same time including a broader level of liability coverage for model or hobby watercraft.
- Virtual currency (aka cryptocurrency)
At the time of our last significant Homeowners revision, the value of one Bitcoin, a popular virtual/cryptocurrency, hovered around $1.9 As of this writing, that same Bitcoin commands about $56,000.10 Given the often significant-yet-erratic values involved and indications that courts may view virtual currencies as "property," we are revising the Property Not Covered section of the ISO Homeowners form to specify that there is no property coverage for virtual currencies.
Bringing it on home
The ISO Homeowners program's updates are expected to become effective starting in early 2022, depending on the state.
To learn more about the major updates and enhancements to the ISO Homeowners program, please email me at William.Schlager@Verisk.com.
- William Frey, “Now, more than half of Americans are millennials or younger,” Brookings Institution, July 30, 2020, < https://www.brookings.edu/blog/the-avenue/2020/07/30/now-more-than-half-of-americans-are-millennials-or-younger/ >, accessed on April 7, 2021.
- “Mean annual household expenditures in the United States in 2019, by generation,” Statista, January 20, 2021, < https://www.statista.com/statistics/825887/us-annual-household-expenditures-by-generation/ >, accessed on April 7, 2021.
- Micah Toll, “The US is doubling e-bike imports this year to half a million, and even that isn’t enough,” Electrek, October 28, 2020, < https://electrek.co/2020/10/28/the-us-is-doubling-e-bike-imports-this-year-to-half-a-million-and-even-that-isnt-enough/ >, accessed on April 7, 2021.
- Matt Trajkovski ,“How fast do electric scooters go [research + data + everything you need to know],” E-Scooter Nerds, < https://escooternerds.com/how-fast-can-electric-scooters-go/ >, accessed on April 7, 2021.
- Kat Dent, “How Fast Do Electric Bikes Go? A Quick Guide to Battery Size and Speed,” eRideGuides, < https://erideguides.com/how-fast-do-electric-bikes-go/ >, accessed on April 7, 2021.
- “Shared Micromobility in the U.S.: 2019,” National Association of City Transportation Officials, December 31, 2020, < https://nacto.org/shared-micromobility-2019/ >, accessed on April 7, 2021.
- “State Medical Marijuana Laws,” National Conference of State Legislatures, April 4, 2021, < https://www.ncsl.org/research/health/state-medical-marijuana-laws.aspx >, accessed on April 7, 2021.
- “Sales of consumer drones and VR/AR devices soar over the pandemic period, reports NPD,” NPD Group, January 11, 2021, < https://www.npd.com/wps/portal/npd/us/news/press-releases/2021/emerging-tech-categories-see-strong-growth-as-consumers-seek-new-forms-of-entertainment/ >, accessed on April 7, 2021.
- Ofir Beigel, “Bitcoin Historical Price & Events,” 99Bitcoins, January 3, 2021, < https://99bitcoins.com/bitcoin/historical-price/ >, accessed on April 7, 2021.
- “Bitcoin,” Coin Desk, April 7, 2021, < https://www.coindesk.com/price/bitcoin >, accessed on April 7, 2021.
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