Annual Home Trends Report Reveals Reduced Catastrophe Claims and Losses for 2019

10/20/2020

ATLANTA — LexisNexis® Risk Solutions released its fifth annual LexisNexis Home Trends Report, announcing that U.S home insurance catastrophe claims and loss cost both decreased in 2019. Catastrophe claims dropped by 32% year-over-year and all-peril loss cost decreased by 13%. While 2019 brought severe wildfires, hurricanes, hailstorms and flooding to some states, the severity and frequency across all perils were lower, which was a welcome relief following significantly higher levels for the previous two years.

Given the unpredictable nature of extreme weather events, insurance carriers need access to trended by-peril home insurance data in order to fully understand the risks associated with a particular location and make informed risk assessment and underwriting decisions. The 2020 LexisNexis Home Trends Report is designed to provide insights that can help home insurance carriers meet loss-ratio objectives and growth targets as well as support more precise and profitable pricing.

Looking at overall trends for 2019, 90% of catastrophe losses in 2019 resulted from hail and wind perils. Texas, at 22%, had the highest distribution of catastrophe claims with 872 major hail events. For the second year in a row, Colorado ranked the highest in loss cost for 2019, and Colorado and Nebraska tied for the highest in loss cost over the six-year period from 2014-2019.

“For those of us in the home insurance industry, 2019 was a welcome relief,” said George Hosfield, senior director and general manager, Home Insurance, LexisNexis Risk Solutions. “Unfortunately, 2020 looks less promising due to wildfire and hurricane activities, as well as COVID-19 creating new claims patterns due to higher home occupancy. All signs point to next year’s report being significantly less positive, making it more important than ever that home insurance carriers have by-peril and macro-level trended data that they can use to benchmark their performance and help make better informed underwriting and risk assessment decisions.”

Additional key findings, by peril, from the LexisNexis Home Trends Report include:

• Wind – 2019 saw a decrease in wind loss cost (20%), frequency (10%) and severity (7%) from 2018. Loss cost and severity peaked in September, mainly driven by Hurricane Dorian and Hurricane Humberto. Overall there was a lower proportion of catastrophe claims than the previous two years, which can be attributed to fewer powerful storms having made landfall.
• Hail – Hail loss cost increased by 19%, making it one of the few perils that increased from 2018, likely due to 2019 experiencing 782 more major hail events than the previous year. Texas remained steady, accounting for nearly 30% of all hail claims in both 2018 and 2019 and the severity of Texas hail claims increased by 5%. April, May and June accounted for nearly 58% of hail claims in 2019.
• Fire and Lightning – California accounted for 96% of catastrophic fire claims in 2019. Total catastrophe loss cost for fire and lightning claims dropped to 5% of 2018’s loss cost. While promising for 2019, significant catastrophe claims are expected for 2020 given that by August 2020, the cumulative acres burnt by wildfires had already surpassed that of the entire 2018 season.
• Weather-Related Water – Despite the country experiencing the second wettest year on record, weather-related water loss cost decreased by 3% from 2018. January and February made up 28% of the loss cost for 2019. While frequency and loss cost decreased, severity increased by 8%, likely driven by record flooding along the Missouri and Mississippi Rivers. 

To download the 2020 LexisNexis Home Trends Report, click here.

About LexisNexis Risk Solutions
LexisNexis^® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit LexisNexis Risk Solutions and RELX.