39% of All Home Insurance Claims in 2020 Due to Catastrophic Weather

Written By
G. Dautovic
March 14,2022

The US homeowners insurance market is going through some troubling times due to worsening weather, according to the sixth iteration of LexisNexis’ annual “Home Trends Report.” The report shows that wildfires, floods, and hurricanes were the leading causes of losses for the home insurance industry.

With a  6% year-on-year increase across all perils, the 39% is the highest percentage this industry had to deal with in the past six years. The increase follows an upward trend in loss costs throughout the past six years. The report also shows that this increase will likely continue throughout 2021. 

These increases were more prominent in some states and not so troubling in others. Still, having a good home insurance policy would have been beneficial in all of them during 2020. The LexisNexis report revealed Louisiana as the state with the highest loss cost in 2020. This is due to its active hurricane season and is likely to increase in 2021 due to Hurricane Ida. On a broader five-year scale, Colorado and Nebraska share first place. These two states had the most significant losses throughout the 2015-2020 period. 

George Hosfield, senior director of home insurance with LexisNexis Risk Solutions, advised: “With catastrophe claims driving losses and reinsurance costs higher, it’s imperative that insurers have the most recent peril-related trend data and an analytics partner who understands how by-peril trends are changing over time.” 

The report also includes other findings on loss costs caused by catastrophes. Wind-related claims frequencies increased by 42%, and loss cost by 63%. On the same note, 2020’s wildfire season was the most active one on record, with the proportions of related losses increasing exponentially. California accounted for a significant part of the loss cost pertaining to fire and lightning claims, with 37.2% of all catastrophe claims in 2020. 

Several catastrophe-related claims were steady or declined in 2020. Hail loss cost and severity decreased in 2020. Non-weather-related water claims also fell in loss cost compared to 2019 because people stayed at home due to COVID-19.

About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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