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MacroMonitor Market Trends Newsletter November 2018

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Checkup Time for Homeowners

Global warming—the proven cause of longer, more intense weather patterns—and rising home prices combine to produce a perfect storm for many homeowners. Trends of MacroMonitor data between 1998 and 2016 suggest that since 2008, the declining rates of property-and-casualty (P&C) insurance coverage may be the result of an increase in the number of households that place other financial needs before protection—the same trends of declining protection are evident in both health and life insurance. Of the 79.5 million US homeowners, only 57% carry insurance on their primary residence other than coverage provided by their basic homeowners policy.

Figure 1: Trend: Homeowners Insurance Includes

To ensure that homeowners are able and willing to repay their mortgage following catastrophic damage, mortgage lenders require homeowners in moderate- to high-risk flood-plain areas to carry flood insurance or to carry earthquake insurance in areas with high seismic activity. Homeowners without a mortgage have no requirement by law to carry flood or earthquake insurance, nor are homeowners who can prove to their lender they are in a financial position to self-insure. Unprotected by insurance, these homeowners accept 100% of the financial risk should a devastating event occur.

Although the MacroMonitor reports 12 million homeowners have flood insurance, a recent study estimates that 40.8 million Americans now suffer exposure to serious flooding resulting from more severe weather than previously—roughly three times more than government projections. Given escalating home prices and the potential for greater risk (both natural and human caused), many homeowners would be prudent to review their P&C policies to reconsider the merits of additional insurance. P&C insurance providers are in a position to contact customers proactively with an annual assessment of their currently liability situation and remedial recommendations.

The MacroMonitor is uniquely qualified to help your institution find the types of households most likely to respond to your P&C outreach efforts, because we have complete demographic, financial, channel, and attitudinal information. For more information, please contact us.

Subscribers have access to this month's Segment Summary, Homeowners with Flood and Earthquake Insurance, an analysis of homeowners most prepared for catastrophic events. Subscribers may request the underlying set of data for this Segment Summary. For more information, contact CFD today.