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Severe tornado and hail events across the U.S. have significantly impacted the results of U.S. insurers (severe storms caused $25 billion in losses in 2011), leading them to re-evaluate coverage and pricing considerations and to look for products that specifically address these risks, says Christina Cronin, senior vice president of standard lines at PartnerRe.

“We see our [primary insurer] clients addressing the problem in a variety of ways,” says Cronin. “While some have elected to withdraw from a particular line and/or geography, others are addressing the issue via rate and deductible increases. We’ve already seen a number of carriers implement mandatory percentage wind deductibles in certain non-coastal areas. Others are introducing more restrictive underwriting guidelines or excluding outbuildings and other structures. And some are changing the valuation provisions for roofs from a replacement-cost basis to actual cash or agreed value, or excluding coverage for cosmetic (nonstructural) roof damage. In many cases, these coverages can be added back or expanded for an additional premium.”

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