This year we offer a refreshed view of by-peril trends in the US home insurance industry and provide updated insights to help carriers make more informed business decisions. In addition to insights on loss cost, frequency and severity, the report includes details on seasonality, distribution of catastrophe claims and geographic trends. Notably, this report is based on the vast majority of industry data.
This report illustrates that not every peril is created equally and that even within a peril, different geographies may be affected. For example, the Wind peril includes both hurricanes and tornadoes, which primarily affect the Southeast and the Midwest. respectively. This is just one example of the greater understanding that you can derive with a broader dataset, which provides a robust foundation for you to benchmark performance, find pricing opportunities and validate previous initiatives. You can also gain a historical view of how by-peril trends are changing over time. These deeper insights into peril-related trends can help you assess and price risks more accurately and ultimately, achieve a more profitable book of business.
The following terminology explanations will help you understand the information presented in the charts and graphs that appear throughout this report. “Loss cost” means the dollars lost, on average, per exposure (house year). “Frequency” is the rate of claims, on average, per exposure. “Severity” refers to the dollars lost, on average, per claim paid. “Relativities” are the proportion of a figure relative to the overall average for the specific metric.
Loss cost trend is the average loss cost relativity, year-over-year, across all states. Loss cost seasonality is the average loss cost relativity, month-to-month, across all years and states. Catastrophe distribution is the proportion of catastrophe and non-catastrophe claims across all months and states within a particular year. Most impacted and least impacted states are ranked on the average loss cost across all months and years within a particular state.
All Peril loss costs continued to decline in aggregate, as they have since 2011. A slight uptick in claim frequency was offset by a decline in severity. El Niño meant a milder winter for most of the country—especially the Northeast—and a sharp reduction in Water–weather claims. In warmer months, a few states were affected by Wind and Hail claims. Interestingly, Wind made up 26 percent of overall claims in 2016—the highest since 2013.
George Hosfield is Senior Director, Home Insurance Solutions, at LexisNexis Risk Solutions. In this role, George manages all aspects of the Personal Lines Property Vertical, including overall strategy, profitable growth, new product development and partnerships. He is responsible for a number of industry-leading data solutions, including LexisNexis Home Inspection Index and LexisNexis Territory Index.
George has been with LexisNexis for over 15 years working in a variety of operational and strategic roles in both the Legal & Professional and Risk Solutions divisions. He holds a B.A. in English from the University of Virginia and an M.B.A. from the University of Richmond, Robins School of Business.
Laura Frisbie is a Statistical Modeler at LexisNexis Risk Solutions. In her role, Laura produces industry analysis and model solutions for P&C insurance. Laura works primarily on predictive modeling for pricing and underwriting auto and property insurance.
Prior to joining LexisNexis, Laura worked as a financial lines pricing actuary at AIG and as a civil engineer at URS Corporation. Laura holds a B.S. in Civil Engineering from Georgia Tech. She also earned a M.S. in Actuarial Science and M.S. in Mathematical Risk Management from Georgia State University. She is currently a student of the Casualty Actuarial Society and is pursuing her Associateship in the Casualty Actuarial Society (ACAS) designation.