The Current Market State of the Habitational Insurance Industry

As continued losses plague the insurance industry, agents need to be aware of the changes in coverage if they are going to best protect their clients and their own personal reputation. Offering insurance coverage is just a part of the job description. Agents need to know the risks and exposures for the clients if they are to expertly advise on which purchases to make. Habitational insurance is one of the areas that has undergone some changes, and here’s what you need to know to better serve your clients.

Insurers Are Enforcing Additional Exclusions

Several years of losses have led to significant changes in the coverage options for habitational properties. Risks are being more carefully scrutinized, and some have been taken out of coverage altogether. Weather, crime rates, and expensive litigation that often rules in favor of the plaintiff are big problems for insurers.

Increasing Premiums Are a Habitational Insurance Market Update

Telling your clients that their premium rates are on the rise isn’t ideal, especially when the market trends are reducing the amount of coverage each policy provides. Because your clients want to keep their rates low, helping them determine a robust risk management strategy is a way to soften the blow over price points. It is also getting harder to find habitational coverage, which means your clients may only be working with you out of default—all the more reason to bring exceptional value to the relationship.

Insurance Carriers Leaving the Market Means Reduced Opportunities

The work of trying to reduce capacity and tightening up on underwriting processes has caused many carriers to abandon habitational coverage altogether. This could hurt your ability to shop around for the best coverage at the best rates. Even more challenging is finding a carrier that will cover the specific liabilities of your client. For instance, several major carriers are no longer including hail as covered events in the Midwest, Colorado, and parts of Texas. If serious catastrophes continue to cause unprecedented losses across the U.S., habitational coverage could become scarce.

Tightening Underwriting Policies Require Stronger Data

The changes across the market mean rethinking the approach to risks, coverage, and potential alternatives. Underwriting has become more dependent on data analytics to determine risk, but having enough information to run these determinations starts with the agent. Trying to price the risk of a multifamily unit and the potential value of losses is seeing more underwriters request engineering assessments of a structure to evaluate the probable maximum loss. Knowing the changes to the underwriting process can better prepare your clients for what to expect by way of approval as well as contract wording and coverage limits.

In light of these changes and others, it is nearly impossible to market and sell the habitational coverage of years past. From the inclusions and exclusions to the carriers where coverage is available, it is imperative to understand the current state of habitational insurance before working with your clients on comprehensive coverage.

About Mavon Insurance

At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed and place business in specialized markets. For more information about our products, or to become an agent, contact us today at (855) 248-1480.