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Homeowners Insurance Claims Cost Rising Rapidly: Study

Homeowners Insurance Claims Cost Rising Rapidly: Study

Homeowners Insurance Claims Cost Rising Rapidly: Study
News from Insurance Journal:

The cost of homeowners insurance claims has been rising rapidly because of the combined effects of rising claim severity and increases in claim frequency, according to an insurance industry report.

A new Insurance Research Council (IRC) study of homeowners insurance claim trends found that from 1997 to 2011, the average claim payment per insured home countrywide rose 173 percent, from $ 229 to $ 626. In 2011 alone, homeowners insurance claim costs per insured home increased 27 percent.

Over the entire study period, the annualized rate of increase was 7.4 percent.

IRC is supported by property/casualty insurance companies and organizations.

In the study, “Trends in Homeowners Insurance Claims,” the IRC examined separately claim trends for claims that were not related to catastrophic events and those that were related to catastrophic events. Trends in average claim severity (the average claim payment per paid claim) for both groups were similar in some respects. For both groups of claims, countrywide claim severity increased almost 200 percent and ended the 15-year period in 2011 with similar values—$ 8,077 for noncatastrophe-related claims and $ 7,553 for catastrophe-related claims.

Significantly, however, the trend in catastrophe-related claim severity was much more volatile from year-to-year, with dramatic increases a…………… continues on Insurance Journal

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