With just a few months to go until the 2014 hurricane season gets underway, property owners and insurers need to take a serious approach to preparing for the impact of strong winds, heavy rainfall and tidal surges that can be generated by spring and summer storms.
Hurricane activity hard to predict
Last year, the National Oceanic and Atmospheric Administration (NOAA) warned that property owners should be prepared for a "very active" hurricane season, with as many as 19 named storms, nine hurricanes and five major hurricanes. However, there were only 13 named storms and two hurricanes. In fact, it turned out to be the first season since 1968 in which no storms reached category two intensity.
This may have been welcome news for residents of coastal areas and the insurers that cover their properties, but it underscores the fact that weather-related risks are very difficult to predict. It is particularly important for insurance carriers that cover properties in the Southeast to be prepared, as this region typically bears the brunt of hurricane season. There is only so much that homeowners can do to prevent damage to their properties, which makes securing the appropriate amount of insurance coverage an essential piece of the risk management puzzle.
Accurate replacement cost estimates are essential
e2Value's patented web-based estimator can help carriers accurately calculate replacement costs for insured structures, which is vital for ensuring that homeowners are able to rebuild after a disaster. Developing accurate valuations also helps carriers maintain a profitable book of business.
Insurers may also need to take specific steps to manage their exposure to risk during hurricane season. For instance, Florida-based People's Trust Insurance Co. recently provided the required 90-day cancelation notice for about five percent of its 115,000 homeowners policies. According to a report in the Insurance Journal, most of the affected homeowners live in Palm Beach, Broward and Miami-Dade counties.
In a press release, People's Trust Director of Marketing Genie O'Loughlin explained that the move was necessary because the company "has experienced very strong growth in the tri-county area in the last year, with even faster growth occurring over the past quarter." The firm reportedly added more than 40,000 new policyholders in 2013, increasing its direct written premiums by 230 percent to $208 million.
"As a result, People's Trust is implementing prudent exposure management strategies to more effectively diversify and balance the company's risk portfolio as we enter the 2014 hurricane season," O'Loughlin said.