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2018

LexisNexis® Home Trends Report

Your source for the leading economic home insurance trends by peril, across time and geography.

Your source for the leading economic home insurance trends by peril, across time and geography.

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OCTOBER 2018

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Welcome

The 2018 LexisNexis® Home Trends Report is part of a series of ongoing reports that are issued by LexisNexis® Risk Solutions.

This year’s report provides an updated view of by-peril trends in the US home insurance industry, which can 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. This report is based on the vast majority of industry data.

 

This report highlights the dramatic effect that catastrophe claims can have on certain perils and states. For example, an intense hurricane season resulted in 60% of Wind claims being catastrophe-related—primarily in Texas and Florida, which were affected by Hurricanes Harvey and Irma, respectively. A similar spike in catastrophe Water–Weather claims was observed, again focused in Texas and Florida. On the west coast, California accounted for 30% of Fire loss costs in 2017 (up from 10% in 2016), with a sharp increase in both severity and proportion of catastrophe claims.

 

With access to a broader dataset, you can assess your book of business in the context of the market—which supports a more robust foundation to validate previous strategies, benchmark performance and find new market opportunities. It also enables you to better understand 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 find opportunities to better meet customer needs with innovative products and services.

Highlights from Accident Year 2017

Loss Costs Increased

All Peril loss costs increased significantly; compared with 2016, loss costs jumped by 19 percentage points.

35%

Catastrophe losses made up nearly 35% of All Peril claims in 2017—an increase of 5 percentage points from 2016.

The Worst Year

Texas and Florida were especially hard-hit by hurricanes, making 2017 the worst year since 2012 for wind damage claims.

20%

Severity for Fire claims grew by 20% across the country and in California, jumped by more than 70%.

2017 Was an Expensive Year

Hurricane Harvey, Hurricane Irma and California wildfires made 2017 an expensive year for catastrophe claims.

About the Data

All data in this report is sourced from internal LexisNexis Risk Solutions proprietary data sources and is based on property exposures and losses for the period ranging from 2012 through 2017. Between 69 and 85 million houses are represented over this time period, totaling 504 million house years over six years. Additionally, the data is based on a sample from across all fifty states and Washington, D.C. Claims are evaluated based on the date of loss.

How to read the charts

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.

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Overall Trends

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Overall Trends - All Peril

In 2017, All Peril loss cost increased compared with 2016 levels.

In a year characterized by a particularly ferocious hurricane season, the increase in catastrophe losses was evident—in fact, 2017 was one of the worst years in recent history for catastrophe losses.
  • All Peril loss cost increased by 19 percentage points over 2016 levels.
  • Catastrophes accounted for nearly 35% of all losses.
Not only were there more catastrophe losses in 2017, but they were also more expensive. In the wake of Hurricanes Harvey and Irma, Texas and Florida were the top-ranking states for catastrophe claims.
  • Catastrophe claims were more expensive in 2017, as severity jumped by 10 percentage points.

Harvey and Irma, but not Maria

Because the LexisNexis Home Trends Report is based on a sample of claims data from across all fifty states and Washington, D.C., it excludes US territories and islands. Consequently, the analysis does not include Hurricane Maria, which is considered one of the deadliest hurricanes in US history1.

Which two states accounted for nearly 41% of catastrophe claims last year?

Incorrect.

Nearly 41% of catastrophe claims came from Texas and Florida.

Next  

Correct!

Nearly 41% of catastrophe claims came from Texas and Florida.

Next  

2017 was one of the worst years in recent history for catastrophe losses.

Incorrect.

2017 was one of the worst years in recent history for catastrophe.

  Back

Correct!

2017 was one of the worst years in recent history for catastrophe.

  Back
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By-Peril Trends

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By-Peril Trends

Wind
Hail
Fire
Water
Theft
Liability
Other

Wind Loss Trend

Select a state to see its
individual wind loss trend

Compared to 2016, the frequency and severity of Wind loss costs increased significantly.

On the heels of 2016’s Hurricane Matthew, 2017 saw two major hurricanes—Hurricane Harvey and Irma—that contributed to a sharp increase in Wind loss cost. Previously, Wind loss cost peaked in spring with tornado season. However, recent years’ hurricane activity has evened out the seasonality of this peril.
Seasonality
Select a state to see its
individual wind loss trend

There was a sharp increase in Wind loss cost, making 2017 the worst year since 2012 for wind damage claims.

On the heels of 2016’s Hurricane Matthew, 2017 saw two major hurricanes—Hurricane Harvey and Irma—that contributed to a sharp increase in Wind loss cost. Previously, Wind loss cost peaked in spring with tornado season. However, recent years’ hurricane activity has evened out the seasonality of this peril.
CatastropheLoss Trend

In 2017, nearly 60% of Wind claims were due to catastrophe claims..

Compared to 2016, catastrophe Wind claims increased by 11 percentage points. Hurricanes were a primary driver of loss cost, with 20% of Wind claims coming from Florida, and 13% from Texas. Notably, the proportion of catastrophe Wind claims was nearly 60% or equivalent to what they were in 2012 when Superstorm Sandy hit.
GeographySeasonality

Florida, Texas and Georgia accounted for nearly 55% of catastrophe Wind claims.

Compared to 2016, catastrophe Wind claims increased by 11 percentage points. Hurricanes were a primary driver of loss cost, with 20% of Wind claims coming from Florida, and 13% from Texas. Notably, the proportion of catastrophe Wind claims was nearly 60% or equivalent to what they were in 2012 when Superstorm Sandy hit.
Catastrophe

The most expensive hurricane season in US history

With a price tag of more than $200 billion in property damage, the 2017 Atlantic hurricane season will go down in history as the most expensive in US history2. Hurricane Harvey ranks second ($125 billion) and Irma fifth ($50 billion) on the top five list of costliest US hurricanes3. Both names have been retired due to the extent of the destruction4. (Hurricane Maria also resulted in significant damage and lives lost, but is not included in the geographic scope of this report.)
Wind
Hail
Fire
Water
Theft
Liability
Other

Hail Loss Trend

Select a state to see its
individual hail loss trend

From 2016 to 2017, Hail loss cost increased slightly, primarily driven by an uptick in claim severity.

In 2017, Hail loss costs and severity increased slightly. However, Hail frequency decreased, particularly when compared to 2016, which was one of the worst years on record for hail damage claims.
Seasonality
Select a state to see its
individual hail loss trend

There was a slight decrease in the frequency of Hail claims.

In 2017, Hail loss costs and severity increased slightly. However, Hail frequency decreased, particularly when compared to 2016, which was one of the worst years on record for hail damage claims.
CatastropheLoss Trend

After a spike in 2016, catastrophe Hail claims returned to the baseline levels observed since 2012.

In 2017, Texas accounted for nearly 25% of catastrophe Hail claims—which, while significant, is an improvement over 2016 during which the state was blasted by severe hail storms. Interestingly, the rankings for the top five states for loss cost are unchanged, despite this year’s report dropping 2011 and adding 2017 data.
GeographySeasonality

Texas accounted for nearly 25% of Hail claims in 2017, which is a significant improvement from 2016.

In 2017, Texas accounted for nearly 25% of catastrophe Hail claims—which, while significant, is an improvement over 2016 during which the state was blasted by severe hail storms. Interestingly, the rankings for the top five states for loss cost are unchanged, despite this year’s report dropping 2011 and adding 2017 data.
Catastrophe
Wind
Hail
Fire
Water
Theft
Liability
Other

Fire Loss Trend

Select a state to see its
individual fire loss trend

Loss cost for Fire claims increased sharply in 2017 due to a continued increase in claim severity.

The combined Fire peril includes both Fire and Lightning. Continuing a trend observed since 2013, loss cost increased in 2017, with an increase of nearly 22 percentage points as compared to 2016 levels. While frequency has remained relatively stable in recent years, severity has continued to increase across the country, particularly in California. Notably, California’s October wildfires were so destructive that there is a corresponding severity peak on the Fire seasonality chart.
Seasonality
Select a state to see its
individual fire loss trend

Country-wide claim severity increased by nearly 20% and in California, by more than 70%.

The combined Fire peril includes both Fire and Lightning. Continuing a trend observed since 2013, loss cost increased in 2017, with an increase of nearly 22 percentage points as compared to 2016 levels. While frequency has remained relatively stable in recent years, severity has continued to increase across the country, particularly in California. Notably, California’s October wildfires were so destructive that there is a corresponding severity peak on the Fire seasonality chart.
CatastropheLoss Trend

In 2017, California wildfires resulted in a record number of Fire claims.

While California is no stranger to wildfires, the summer of 2017 was particularly severe. Typically, California accounts for about 10% of Fire loss costs; in 2017, the proportion was nearly 30%. Furthermore, more than 70% of Fire claims in the state were due to catastrophe, and severity also increased by 70%. The jump in severity was partly due to the many catastrophe claims that resulted in a total loss, as well as the prevalence of higher-value homes in Napa and Sonoma Counties.
GeorgraphySeasonality

More than 70% of Fire claims in California were due to catastrophe.

While California is no stranger to wildfires, the summer of 2017 was particularly severe. Typically, California accounts for about 10% of Fire loss costs; in 2017, the proportion was nearly 30%. Furthermore, more than 70% of Fire claims in the state were due to catastrophe, and severity also increased by 70%. The jump in severity was partly due to the many catastrophe claims that resulted in a total loss, as well as the prevalence of higher-value homes in Napa and Sonoma Counties.
Catastrophe

California wildfires: Costly and deadly

The 2017 California wildfire season is generally regarded as one of the state’s worst5, both in terms of destruction and cost. The Thomas Fire—the largest in California history—took nearly two months to completely contain6, and October fires in wine country resulted in $9.4 billion in insurance claims7.
Wind
Hail
Fire
Water
Theft
Liability
Other

Water is categorized into two sections: non-weather related water perils and weather related water perils. Please select a category to continue.

Non-Weather RelatedWeather Related
NON-WEATHER RELATED

Water Loss Trend

Select a state to see its
individual water loss trend

The industry has seen a consistent—and rather steep—increase in loss cost for non-weather related water claims.

This peril encapsulates claims related to water damage from accidental water discharge, such as pipe leaks and appliance leakage. Similar to Theft and Liability, this peril is not expected to be affected by catastrophe events.
Seasonality
Select a state to see its
individual water loss trend

Claim severity has remained relatively stable; however, the frequency of claims increased by 19 percentage points from 2016 levels.

This peril encapsulates claims related to water damage from accidental water discharge, such as pipe leaks and appliance leakage. Similar to Theft and Liability, this peril is not expected to be affected by catastrophe events.
CatastropheLoss Trend

New Jersey and Maryland are the top states in terms of highest loss cost for this peril.

Florida is one of the top five states for Water–Non-Weather loss cost and its claim severity is among the highest in the nation. One explanation may be the prevalence of Assignment of Benefits (AOB) in Florida, which gives a third party the authority to file a claim, make repair decisions and collect insurance payments without the involvement of the homeowner. Notably, AOB has led to increased levels of insurance fraud in Florida8.
GeographySeasonality

Claim severity is particularly high in Florida.

Florida is one of the top five states for Water–Non-Weather loss cost and its claim severity is among the highest in the nation. One explanation may be the prevalence of Assignment of Benefits (AOB) in Florida, which gives a third party the authority to file a claim, make repair decisions and collect insurance payments without the involvement of the homeowner. Notably, AOB has led to increased levels of insurance fraud in Florida8.
Catastrophe
Weather Related

New for 2018: Remapping Water peril claims

This year’s report includes slight changes to the way that Non-Weather Related and Weather Related Water claims have been mapped. Internal LexisNexis Risk Solutions analysis shows that the new mapping will enable more accurate claims allocation for these perils. This modification will also contribute to more accurate estimates of loss cost, frequency and severity metrics for water damage claims.
WEATHER RELATED

Water Loss Trend

Select a state to see its
individual water loss trend

In 2017, loss cost for this peril increased from 2016 levels, primarily driven by increasing severity.

There was a 6 percentage point jump in loss cost for Water–Weather. While severity decreased slightly, frequency increased as a result of a particularly active hurricane season. In previous years’ reports, there was a sharp winter spike corresponding with frozen pipes; remapping the Water perils has decreased the magnitude of this spike.
Seasonality
Select a state to see its
individual water loss trend

Remapping the Water–Weather and Water–Non-Weather perils has resulted in smoother seasonal behavior.

There was a 6 percentage point jump in loss cost for Water–Weather. While severity decreased slightly, frequency increased as a result of a particularly active hurricane season. In previous years’ reports, there was a sharp winter spike corresponding with frozen pipes; remapping the Water perils has decreased the magnitude of this spike.
CatastropheLoss Trend

There was a 4 percentage point jump in catastrophe Water–Weather claims as compared with 2016.

In the wake of Hurricanes Harvey and Irma, loss cost and catastrophe claims increased for Water–Weather, particularly in Texas and Florida. Perhaps not surprisingly, there were a record number of water damage claims in Texas alone.
GeographySeasonality

In 2017, nearly 16% of catastrophe Water–Weather claims came from Texas and Florida.

In the wake of Hurricanes Harvey and Irma, loss cost and catastrophe claims increased for Water–Weather, particularly in Texas and Florida. Perhaps not surprisingly, there were a record number of water damage claims in Texas alone.
Catastrophe
Non-Weather Related

Water, water, everywhere

In late August 2017, Hurricane Harvey unleashed 33 trillion gallons of water along the Gulf of Mexico9. The Houston area, in particular, received more rain in three days than half of the US had seen all year10.
Wind
Hail
Fire
Water
Theft
Liability
Other

Theft Loss Trend

Select a state to see its
theft loss trend

A continued decrease in Theft loss cost is primarily driven by declining frequency.

Several factors may contribute to the continuing trend toward declining Theft loss cost. As mentioned last year, an improving economy and the increasing availability of affordable home alarm systems may be contributing factors. In addition, as connected home technology gains acceptance, it may also reduce the frequency of theft.
Seasonality
Select a state to see its
theft loss trend

Advances in home security, from the greater availability of home alarm systems to connected home technology, may contribute to decreasing Theft frequency.

Several factors may contribute to the continuing trend toward declining Theft loss cost. As mentioned last year, an improving economy and the increasing availability of affordable home alarm systems may be contributing factors. In addition, as connected home technology gains acceptance, it may also reduce the frequency of theft.
GeographyLoss Trend

Nevada and Washington, D.C., top the nation in terms of Theft loss cost.

Since 2014, Nevada has had the highest Theft loss cost in the country, while Washington, D.C., has had the highest Theft frequency for seven straight years.
Seasonality
Wind
Hail
Fire
Water
Theft
Liability
Other

Liability Loss Trend

Select a state to see its
liability loss trend

Liability loss cost and frequency continue to decline steadily.

The industry continues to see a favorable trend with Liability loss cost and frequency declining steadily. The summer spike could be due to an increase in outdoor activity, such as the use of pools, hot tubs and trampolines.
Seasonality
Select a state to see its
liability loss trend

Liability claims tend to peak in the summer months.

The industry continues to see a favorable trend with Liability loss cost and frequency declining steadily. The summer spike could be due to an increase in outdoor activity, such as the use of pools, hot tubs and trampolines.
GeographyLoss Trend

There has been no change in the top five states for Liability loss cost.

The industry continues to see a favorable trend with Liability loss cost and frequency declining steadily. The summer spike could be due to an increase in outdoor activity, such as the use of pools, hot tubs and trampolines.
Seasonality
Wind
Hail
Fire
Water
Theft
Liability
Other

Other Perils Loss Trend

Select a state to see its
other perils loss trend

Loss cost due to Other Perils increased slightly from 2016 levels.

Unlike other perils, this category does not reflect an actual cause of loss that has bearing on pricing. Due to inconsistencies in how different carriers report Other Perils, it is difficult to draw further conclusions.
Seasonality
Select a state to see its
other perils loss trend

Perils in this category include physical damage not included elsewhere, extended coverage, damage to property of others, medical payments and more.

Unlike other perils, this category does not reflect an actual cause of loss that has bearing on pricing. Due to inconsistencies in how different carriers report Other Perils, it is difficult to draw further conclusions.
GeographyLoss Trend

Catastrophe claim rates remain low for Other Perils.

Unlike other perils, this category does not reflect an actual cause of loss that has bearing on pricing. Due to inconsistencies in how different carriers report Other Perils, it is difficult to draw further conclusions.
Seasonality
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Conclusion

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Conclusion

The 2018 LexisNexis Home Trends report highlights some of the challenges that home insurance carriers face in managing by-peril risk. In 2017, intense hurricanes and wildfires led to a sharp spike in catastrophe claims loss cost for Wind, Water–Weather and Fire perils—particularly in Texas, Florida and California.

Carriers that rely strictly on their own data may find it difficult to understand their true performance in the marketplace. On the other hand, by augmenting data with an industry-wide dataset, you can:

  • Generate insights into by-peril history, seasonality and geography that enable you to better select and manage risk.

  • Support more sophisticated pricing at point of quote and renewal.

  • Benchmark your performance against the performance of the market.

  • Identify underserved market segments or opportunities for pricing optimization.

As home insurance carriers continue to be tasked to meet loss-ratio objectives and growth targets, aggregated by-peril data can help you achieve a deeper understanding of the risk associated with a particular location. This, in turn, can help you differentiate your business and help avoid adverse selection as the use of industry-wide data becomes more common. In the long term, aggregated by-peril data can enable more accurate pricing, a healthier book of business and long-term profitability.

Incorrect.

Aggregated by-peril data can enable not only more accurate pricing and a healthier book of business but also long-term profitability.

Correct!

Aggregated by-peril data can enable not only more accurate pricing and a healthier book of business but also long-term profitability.

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Contributors

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Contributors

Contributors to this report.

George Hosfield

Senior Director, Home Insurance Solutions
LexisNexis® Risk Solutions

George Hosfield is Senior Director, Home Insurance, 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® Property Data Prefill and LexisNexis® Fire and Disaster Response Score.


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 Evans

Statistical Modeler
LexisNexis® Risk Solutions

Laura Evans 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.

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How We Can Help

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How LexisNexis® Can Help You

LexisNexis® Risk Solutions helps home insurance carriers optimize their book of business by leveraging advanced risk segmentation by peril, reducing expenses and identifying new areas for profitable business growth. With LexisNexis Risk Solutions for Home Insurance, you can expect to:

  • Gain the ability to better segment risks at the peril level, yielding more accurate ratings of new and existing risks in your portfolio.
  • Reduce and manage expenses while improving policyholder satisfaction with continuous monitoring, single-point-of-entry access and dynamic underwriting capabilities.
  • Discover where your book of business presents higher levels of risk than desired, relative to your underwriting strategy, and gain the insight to make cost-effective business decisions.
  • Reduce the time to quote and make it easier for consumers and agents to do business through all distribution channels.

For more information, call 800.458.9197, or email insurance.sales@lexisnexisrisk.com

For more information, call 

800.458.9197

About LexisNexis Risk Solutions

LexisNexis Risk Solutions harnesses the power of data and advanced analytics to provide insights that help businesses and governmental entities reduce risk and improve decisions to benefit people around the globe. We provide data and technology solutions for a wide range of industries including insurance, financial services, healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX Group (LSE: REL/NYSE: RELX), a global provider of information and analytics for professional and business customers across industries. RELX is a FTSE 100 company and is based in London. For more information, please visit www.lexisnexis.com/risk or www.relx.com.