by Greg Friz, Director
Property insurance and property insurable values are shifting significantly due to economic, environmental, and technological factors. At Centurisk, we keep up on these industry trends to help our customers better prepare for, mitigate, and manage the risks. The six biggest property risk and valuation trends we’re hearing about for Fall 2024 include:
1. Increased natural disasters equal higher premiums and lost coverage
Recently, property insurance premiums have increased because of catastrophic risk events. The frequency and severity of natural disasters such as wildfires, floods, hurricanes, and other extreme weather events are driving up insurance premiums, especially in high-risk areas like coastal zones, wildfire-prone regions, and areas vulnerable to floods. In some regions — particularly in parts of California, Florida, and Louisiana— insurers are either raising premiums significantly or withdrawing coverage altogether, making organizations scramble and struggle to find affordable insurance.
2. Insurers and insureds are worried about insufficient coverage
High inflation in construction materials (such as lumber, steel, and cement), combined with labor shortages, have driven up the cost of repairs and rebuilding after property damage. Many properties are now underinsured because their policy limits don’t reflect current replacement costs. With rising costs, insureds are increasingly concerned they may not have sufficient coverage to rebuild their properties after a major loss. Insurers and brokers are encouraging policyholders to review their coverage limits to ensure they are adequately insured.
3. Better risk assessment translates to more frequent valuations
Insurers are also requiring more frequent property valuations to be certain that insured values reflect the current cost to replace an insured asset. They may use data analytics and AI to better assess these risks and exposures. Properties in areas deemed higher risk (due to natural disasters or crime rates) are commonly seeing an increase in premiums or loss of capacity.
4. There’s a growing interest in green solutions
Sustainable buildings with energy-efficient systems, flood-resistant designs, and climate-adapted materials are becoming more attractive to insurers. There are increasing incentives for the adoption of these solutions, as well; properties that meet certain green certifications may see lower insurance costs and higher valuations.
5. Insurers are beginning to incentivize risk mitigation
Some insurance companies are offering incentives for installing risk mitigation measures, such as fire-resistant roofing, storm shutters, or flood barriers. These measures can help lower premiums and protect property by reducing the risk of damage. As climate risks grow, properties that incorporate climate-resilient features — such as elevated structures in flood zones or fire-resistant materials in wildfire areas—are likely to hold or increase their value relative to properties that are less resilient to climate impacts.
Governments and local authorities implementing stricter building codes in disaster-prone areas may require property owners to upgrade their buildings to meet higher standards. This can impact both property values and insurance premiums.
6. Tech-Driven Innovations in Insurance
Insurers are increasingly offering parametric insurance, which provides fast payouts based on a specific event (such as an earthquake or hurricane) meeting predefined parameters, rather than requiring an extensive damage assessment. At Centurisk, we’ve seen this trend growing as insurers seek faster and more efficient ways to handle disaster-related claims.
Stay Proactive: Managing Changing Property Insurance Risks
The property insurance renewal process and property insurable values are heavily influenced by environmental challenges, economic pressures, and technological advancements. But there’s no need to be overwhelmed; there are simple ways you can stay proactive in the face of change and manage your property risk more effectively. You can:
- Review your property insurance policies and memo of coverage regularly to ensure it keeps up with current trends and organizational needs.
- Upgrade properties for better climate resilience.
- Make sure you get regular on-site property valuations from a trusted property appraisal partner who keeps up with risk management and insurance industry trends.
By ensuring your coverage reflects current market conditions during the renewal process, and keeping your valuations up-to-date, you can avoid underinsurance or excessive premiums. Contact Centurisk on how we can help you get the accurate valuations you need to move with change.
About the Author
Greg Friz is a Director for Centurisk and resides in Southern California. He and his wife enjoy golfing, biking, and hanging out with their adult children and dog, Lambeau.