Pricing for insurance has shifted significantly over the last four years and in my opinion, it will continue to change as insurance companies look for ways to increase their net profit lines and pay less for insured losses. Homeowners are now bearing more responsibility than ever through increased deductibles, delays in payment, and poor customer service that likely relates to a long-term training debt.
As an example, consider the following conclusions from data companies relied on by the insurance industry to predict the final amount of dollars that will be expended on Hurricane Beryl (July 2024).
Recent insights from Moody’s reveal that Hurricane Beryl’s impact on insurers will be “low and readily absorbed.” While this might sound reassuring, it masks a significant trend: the increasing burden on homeowners to manage the cost of losses to their homes.
CoreLogic estimates that insured wind losses in Texas could range from $2.5 to $3.5 billion. Many homeowners face deductibles between 1% and 5%. This means that for a significant portion of property damage, homeowners will likely end up paying out of pocket, with potential deductibles of up to $20,000 for an average home price of $400,000.
Why are homeowners paying more in premiums and deductibles? As insurers adjust their strategies to address how much losses cost them, they are nudging homeowners toward higher deductibles.
Understanding these dynamics is crucial for a restorer, and with the shifts in coverage, they must be proactive in reviewing homeowners’ insurance choices.
Here are a few strategies for restorers to consider:
- Evaluate potential jobs based on the deductible and only accept those jobs where the customer can afford to pay. Do not attempt to cut corners or reduce the value of what a homeowner receives from your company.
- Create Value Ads that address how a high deductible may save homeowners money on monthly premiums but may ultimately make home repairs unaffordable.
- Engage with insurance agents and don’t hesitate to ask questions. Understanding the limits of policies can empower a restorer to make informed decisions.
- Consider offering add-on sales like better roofing, storm shutters, or water shutoff valves. Investing in home improvements can help homeowners reduce potential damages.
The insurance landscape is evolving and knowledge is your best defense. How are you adapting to the changes?
Chris McQueen
Chris McQueen is a Business Development Advisor for Violand Management Associates (VMA), a highly respected consulting company in the restoration and cleaning industries. Chris is a veteran of the restoration industry, having worked as an independent claims adjuster, estimate reviewer, and district manager for the world’s largest independent claims management company. Through Violand, Chris works with companies to develop their people and their profits. To reach him, visit Violand.com or call (330) 966-0700
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