Increases in claim severity and, more recently, frequency are responsible for a 7.4 percent annualized rate of increase in homeowners claims costs from 1997 to 2011, the Insurance Research Council says in a new study.
The IRC says that in 2011 alone, homeowners claim costs per insured home—which includes houses, condominiums and apartments—increased by 27 percent.
“Insurance companies face significant challenges in responding effectively to rapid growth in claim severity and increases in claim frequency, and in managing the volatility attributable to catastrophe-related claims,” says Elizabeth Sprinkel, senior vice president of the IRC, in a statement. “In addition, consumers will find it increasingly important to consider steps to control their personal exposure to risk and to mitigate the damages and costs associated with severe weather events.”
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