Do insurers need to assist clients in rebuilding their lives—or not at all?
One Assist: Severity Claims Process 25Year Now
Due to the severity and frequency of Nat Cats increasing, the P&C insurance industry in Canada is looking for ways to strengthen the claims process.
This includes initiatives to “build back better” that promote equipping newly rebuilt roofs with hurricane straps or hail-resistant shingling to withstand future storms.
Insurance companies have created policies that enable homeowners to improve their rebuilds, according to Glenn McGillivray, managing director of the Catastrophic Loss Reduction Institute.
A working group comprising sixteen insurance companies has been diligently pursuing potential solutions for some time now, he continued.
Covering upgrades makes sense even though insurers may be concerned about it because it could result in larger client payouts, according to Graham Haigh.
chief operating officer and senior vice president of Wawanesa Mutual Insurance. Managing client concerns can be effectively accomplished by preventing future losses.
“That material will typically cost a little bit more, but the work shouldn’t take much longer to complete,” he informed CU. “There won’t be much of a difference in [the rebuild time] if you install a hail-resistant shingle as opposed to a 25-year asphalt shingle.
Haigh compared build back efforts at the individual client level more closely to community-level government efforts to build firebreaks or dikes in order to discourage Nat Cats. He points out that being ready for future setbacks ultimately saves money and effort.
The best course of action?
What if, however, the P&C industry is receiving a different message from more frequent natural disasters? McGillivray stated, “We have to acknowledge that one fundamental idea of rebuilding better is sometimes not rebuilding at all.”
We primarily discuss that on the flood side, where we support the notion of buyouts, and the federal government is considering launching a buyout initiative.
They’re taking a look at it, and buyouts are fairly common in the US, where states like New Jersey are actual industry leaders. In Canada, we have completed a few, but they were ad hoc. We require a strong program.
Calgary following the 2013 floods is one example of this. “In that instance, the government purchased a portion of the properties of
Haigh stated, “Those destroyed houses in [particular] neighborhoods allowed people to relocate to other areas of the city.”
Questions of jurisdiction
Several sources pointed out that depending on how jurisdiction is interpreted, that might be a federal or provincial program.
The question of whether or not policies should allow property owners to rebuild better—as long as it’s somewhere else—is nuanced and goes beyond P&C insurance, according to Crawford & Company’s president of Canadian operations, Greg Smith.
But he told CU, “It’s a crucial conversation that needs to involve the insurance industry, higher levels of government, and the municipality.” “It is especially pertinent in regions that frequently experience natural disasters.”
“We want to ensure that individuals have access to all the information when choosing where to live. One of those indicators is the cost of insurance.
A homeowner should take into consideration the fact that their coverage may be more expensive and have restrictions if it differs from that of a neighbor who lives a little further away and higher up on a hill, according to Haigh.
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