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Insurance companies are tightening requirements and asking consumers to meet higher safety standards before receiving coverage, according to one broker executive recently interviewed by PropertyCasualty360.com.
Kevin Daley is president and private client leader at EPIC Insurance Brokers & Consultants. PropertyCasualty360.com spoke with Daley about the increasing requirements and what to expect from insurers in 2025 and a beyond. While carriers emphasize high-risk states like California, Texas and Florida, property owners everywhere now must take responsibility for risk management by implementing fireproofing measures, eliminating combustibles and investing in advanced mitigation systems, Daley said.
Prior to EPIC, Daley was president of Field Operations at PURE. He also spent eight years at Marsh serving as managing director and Southwest Partnership leader. He began his insurance career at Chubb.
PropertyCasualty360.com: Is there a lack of action from homeowners and communities in mitigating their own risk? Why?
Daley: Personal risk management and risk mitigation has never been more important, and homeowners and communities are beginning to realize that. Insurance premiums, especially in heavily CAT-prone areas, are continuing to increase, and individuals and communities are looking for cost effective ways to protect their property and potentially reduce the cost of insurance.
PC360: Why is the onus put on homeowners? Will insurance companies lower premiums if homeowners meet them halfway? Why or why not?
Daley: Effective risk management and mitigation is a partnership; it works best when individuals and insurance carriers work together to manage and mitigate risk. Often, effective efforts to protect a property will result in increased capacity (i.e., more carriers interested in a risk), as well as lower premium costs.
PC360: What types of risk mitigation will homeowners have to make on their own to appease insurance companies and receive coverage?
Daley: Despite recent wildfire events, water continues to be the primary cause of loss for homeowners in the US. Leak detection and water shut off technology is quickly becoming table stakes for homeowners. Effective risk management is not about appeasing insurance companies – it’s about smart actions and investments aimed at protecting you, your family and your assets.
PC360: Will emerging carrier demands eventually be included in the construction of new homes? What types of technologies will be used in new home construction to mitigate risk?
Daley: States like Florida have already adopted building codes designed to improve the likelihood a home survives a hurricane. Advancements in our understanding of how wind and flying debris affects roof stability and windows have led to significant improvements in those codes.
I would expect California to continue making thoughtful revisions to its building codes in areas with high wildfire risk.
PC360: Will parts of the U.S., once populated with homes and businesses despite area weather and catastrophe risk, be abandoned or drastically changed by insurance carriers that either leave the region or demand more from consumers for coverage?
Daley: I don’t think we will see vast areas of the country abandoned due to weather or catastrophic risk. Carriers, consumers and regulators will ultimately come together to solve risk and capacity issues. Thoughtful risk management and mitigation will find capacity.
Perhaps most importantly, state regulators must recognize the need for a stable insurance market. CAT activity will persist – and it's likely to become more severe and impact a growing number of regions. Regulators must work with insurance carriers to effectively balance the cost of risk with the impact of effective risk mitigation.
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