Insurance shoppers' top concerns in 2021
Many of the top concerns held by policyholders in 2020 will carry over into this new year.
2020 was a tumultuous year that many were happy to see come to an end. However, many of the year’s greatest challenges did not cease with the start of a new year.
Much of what made 2020 so devastating — the global pandemic, record-breaking weather activity, and economic turmoil — impacted insureds directly and may have direct implications on policy shopping trends in 2021.
Taking a pulse on this, a recent Private Risk Management Association (PRMA) survey identified the greatest concerns of insurance consumers going into 2021. At the top of the list, COVID-19, travel and family safety will continue to be primary concerns for insurance customers in 2021, followed by catastrophic weather and the ability to retain insurance coverage.
According to the PRMA survey, more than 150 agents and brokers, representing 37,000 clients, found most of their insureds are feeling vulnerable about the future, underscoring the importance of homeowners taking proactive measures now to prepare against potential losses.
Among the study’s key findings, 76% of risk managers surveyed said that family safety and financial concerns stemming from the pandemic are impacting their clients. Nearly 54% said catastrophic weather worries keep their clients up at night, and precisely half (50%) said travel and personal safety weigh on their clients’ minds. Ranking just above cybersecurity concerns, 30% of risk managers said that the ability to secure and keep insurance coverage is also an issue.
COVID-19′s far-reaching impact
COVID-19 changed life as we once knew it in 2020. The pandemic sent workers home and kept offices empty throughout the year and into 2021. While virtually the entire world was stuck at home, many Americans took up unplanned renovation projects. The PRMA survey posed the question, “Will clients be more actively renovating and updating their indoor and outdoor space in 2021/?”
A majority of risk managers (79%) said yes.
Before insureds start construction or hire any service providers, it’s important to vet contractors and ask the right questions. Insureds should also ensure they have the proper insurance coverage in the event damage is done to the structure of the home.
Lisa Lindsay, executive director of PRMA, says a proper and full vetting goes well beyond the cost estimates and references they may provide.
“A homeowner will want to make sure they are properly licensed, bonded and have insurance (general liability and workers’ compensation), and appropriate insurance limits to cover the scope of the job,” Lindsay says. “The contractor should provide the homeowner with a certificate of insurance which confirms all coverage that is in place.”
Homeowners should also understand how the contractor will manage the day-to-day project, she adds.
Ask how the work site will be managed, how materials will be stored, and what daily routines will be followed to ensure a safe environment for workers and homeowners living in the home during construction.
Finally, Lindsay says homeowners should immediately let their insurance agent know they are contemplating a construction project who can make sure the proper coverage is in place and can also bring additional resources to the table, such as an insurance company loss specialist.
“These specialists will be able to advise about some loss prevention measures that make sure the home is built in a resilient manner that protects the property and the safety of the family,” Lindsay says. Examples of risk management solutions would be installing alarm systems, sprinkler systems, water shut-off devices, generators and overall construction features that are often more affordable to include during construction versus after.
“Ensuring that all the right people (homeowner, insurance agent, the insurance company, architect and contractor) have a seat at the table at the beginning of a project will secure a successful outcome for everyone.”
2020′s record-breaking extreme weather activity will only worsen
2020 was a historic year for more reasons than just coronavirus. The year’s Atlantic hurricane season broke the record for most named storms, topping out at 30. U.S. wildfire activity also reached an all-time high, with more than 57,000 fires burning over 10 million acres, according to the National Interagency Fire Center (NIFC).
As climate experts and industry professionals have said for years, the worsening impact of climate change will only continue to grow as time goes on, worsening challenges for the insurance industry and impacting its customers whose coverage needs will likely shift as a result. As these challenges evolve, new solutions will be needed to counter them.
In a recent analysis from Willis Towers Watson on what to expect in the year ahead, experts say to address these worsening climate risks, parametric solutions will become more common for companies facing risks from such potentially huge and unpredictable risks as natural catastrophe and weather.
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