Last year was the fifth-warmest year on record for the contiguous United States (the 48 connected states, excluding Alaska, Hawaii and US-administered island territories) and a historic year for billion-dollar weather and climate disasters, according to the country’s National Oceanic and Atmospheric Administration (NOAA).
NOAA data shows 28 separate billion-dollar events identified during 2023 in the US, the highest annual disaster count since records began, with a total cost of $92.9 billion.[i]
As of 8 May this year, the NOAA confirmed seven weather/climate disaster events where losses exceeded $1 billion affecting the US, including five severe storm events and two winter storm events.[ii]
Despite the growing risk to property from extreme weather events, recent research by the Insurance Information Institute[iii] found that around 12% of homeowners choose not to buy homeowners’ insurance.
Worryingly, around half (48%) of non-buyers surveyed were in lower income brackets – with household income of less than $40,000 per year – and therefore the least able to cope with the cost of repairing weather-damaged properties.
However, it appears that even those homeowners who can afford coverage still feel exposed, and are increasingly concerned about being under-insured for weather risks, including homeowners in the high net worth segment.
As insurance premiums have risen, often by double-digit percentages, and some market participants have withdrawn from writing coverage for the worst-affected regions,[iv] homeowners have either elected to reduce coverage to control costs or seen coverage cut by carriers, with lower limits, more exclusions, and increased deductibles.[v]
According to AEGIS London’s Digital Development Manager Calum Williams, these substantive changes to the homeowners insurance market in the US have driven broker demand for wind and hail deductible buy-back product, tailored for the private homeowners market.
We responded to this demand with the launch in May of exactly that - a new digital product offering aimed at US-based private property owners.
“The growing number of severe weather events in North America has led to increasing demand for greater protection for private property owners who are increasingly having to retain more risk, particular in the high-net worth sector,” said Williams.
With our strong track record at AEGIS London in underwriting wind deductible buy-backs for the commercial sector this felt like a natural extension of our specialism.
The new product is available to surplus lines brokers on AEGIS London’s online quote and bind platform, Opal. The product will enable the end client to lower deductibles for wind and named storm damage to their private homes in the US, reducing the potential cost of repairs or rebuilding following a natural catastrophe event.
[i] Assessing the U.S. Climate in 2023, NOAA, 9 January 2024
[ii] Billion-Dollar Weather and Climate Disasters, NOAA, as of 8 May 2024
[iii] Homeowners Perception of Weather Risks: 2023Q2 Consumer Survey, Insurance Information Institute
[iv] The risky economics of living without homeowners insurance, Reuters, 28 March 2024
[v] As Home Insurance Bills Go Up, Owners’ Coverage Is Going Down, New York Times, 16 February 2024