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