Filed Under:Markets, Personal Lines

Three centuries of coverage: Charting the evolution of homeowners' insurance

From the first policy to today, the insurance industry has undergone a transformation.

Insurance has come a long way since the first policy was written in the 1730s. In those days, policies were mainly vested in fire protection, and it wasn’t until more than 100 years later, in the 1830s, when state governments became involved, collecting premium taxes and keeping capital reserves.

The first modern homeowners’ multiperil policy wasn’t created until 1950, and since then, the industry began to employ a more high-touch underwriting process, using agents, specialized underwriters and property inspectors to understand and quantify risk. Very little aggregated data regarding risk indicators was often unavailable, and early homeowners’ rating plans were very simple.

Today, the insurance industry is driven by data and predictive analytics, as insurers file multithousand-page rate plans with thousands of pricing tiers, using dozens of rating variables. As insurers mitigate profitability challenges, competition increases and data has become more available. As we move forward, we can expect to see homeowners’ insurance following auto’s historical trend of price and underwriting sophistication.

The speed with which new data sources and tools are becoming available has steadily increased over the past 20 years, and the advancements will certainly continue into the future of insurance and underwriting decisions.

Verisk Insurance Solutions – Underwriting, a Verisk Analytics business, created a timeline, "The Evolution of U.S. Homeowners Underwriting," which highlights significant milestones in the insurance industry for underwriting and rating, policy development, and legislative and regulatory changes.

 

Source: Visualizea publication of Verisk Insurance Solutions – Underwriting, Q2 2014 edition, “The Evolution of U.S. Homeowners Underwriting”. © 2014 Insurance Services Office, Inc. Reprinted with Permission.

 

Click "next" to read about the years 1860 to 1900s, which saw the impact of the San Francisco earthquake and fire. 

 

Source: Visualizea publication of Verisk Insurance Solutions – Underwriting, Q2 2014 edition, “The Evolution of U.S. Homeowners Underwriting”. © 2014 Insurance Services Office, Inc. Reprinted with Permission.

 

Click "next" to read about the 1910s to the 1960s, and major federal legislative changes impacted the industry.

 

Source: Visualizea publication of Verisk Insurance Solutions – Underwriting, Q2 2014 edition, “The Evolution of U.S. Homeowners Underwriting”. © 2014 Insurance Services Office, Inc. Reprinted with Permission.

 

Click "next" to read about the 70s to today, which includes events such as the establishment of the Insurance Services Office, Hurricane Andrew and more.

Source: Visualizea publication of Verisk Insurance Solutions – Underwriting, Q2 2014 edition, “The Evolution of U.S. Homeowners Underwriting”. © 2014 Insurance Services Office, Inc. Reprinted with Permission.

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