In Los Angeles, it’s months before “wildfire season” technically begins again, although some believe it has extended to be year round now.
The clean up is underway.
The rebuilding process has begun.
Yet numerous questions remain. I hear them as I speak with WOWS’s brokers, other insurers, friends, neighbors, and the realtors I meet and address at the California Association of Realtors meetings throughout the state.
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What’s the future of California homeowners insurance?
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How can Americans best protect their number one asset?
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How does a homeowner know that they are adequately insured?
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How can one obtain coverage at an affordable price?
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Are you insured for all that you need to cover?
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Can you lower your premium while maintaining sufficient coverage?
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Will the state’s new fire maps send insurance rates soaring?
For years, homeowners’ insurance was just there. It was a safety net, ready to catch the policy holder when disaster struck.
Now that net is fraying and homeowners are having difficulty understanding why coverage is becoming so expensive or, in some areas, nearly impossible to obtain.
Homeowners across the country, especially in wildfire-prone states, are seeing their premiums skyrocket, their policies canceled or, in some cases, it’s challenging to find adequate affordable coverage.
Insurers are feeling the pressure, too. For years, they relied on traditional risk models to calculate premiums, issue policies, and assume predictable loss patterns. The landscape has changed. Rising claims, extreme weather events, and economic pressures are pushing the industry to a breaking point.
If we look at the years between 2013 and 2022, it’s clear that it’s becoming harder for insurers to stay profitable. During that period, insurers have had a combined ratio of 108, which means they spent 108% of their premiums. They’re paying out more than they’re taking in. That’s a dangerous thing. And unsustainable.
The insurance industry has been basically going through Einstein’s theory of insanity, doing the same things over and over again and expecting a different result. And with all the changes from 2013 to now, when carriers say they have a 108% loss ratio, I would estimate that’s on the low side. Carriers are definitely losing money.
When insurance carriers lose money, they pull out. Right now, they’re doing historic cancellations throughout California.
We launched the WOWS program last year to combat this. What’s really scary is it’s not just happening in California. The Western United States is being affected by this. And unless we make changes, and there’s a lot of things that just are common sense changes to the industry, it’s not viable. Rates are going to continue to rise and it’s going to be out of control.
And what’s happening in the housing market as insurance becomes either too expensive or difficult to obtain?
What’s the solution?
I like to believe that WOWS is leading the charge to bring new options to California’s homeowners.
In the past few months, WOWS Insurance Services has announced partnerships with several other insurance carriers to expand the coverage available to California homeowners.
It’s exciting news for the industry. And for homeowners, too. These collaborations will provide options and solutions for high-risk, luxury homes and mid-level properties in California valued at under $10 million.
These partnerships offer California residents new options and choices for property coverage:
- Enhanced Coverage Options: Providing a wider range of coverage options tailored to high-value properties in high-risk areas.
- Risk Mitigation and Loss Control: Evaluating the risk throughout the quoting process.
- Innovative Solutions: Developing insurance solutions that address evolving challenges in the California property insurance market.
- Exceptional Claims Handling: These companies in-house claims management teams guarantee top-tier service.
The companies will make a significant impact on the California insurance market due to:
- Developing New Programs: Introducing tailored insurance programs for high-risk properties, including seasonal treatments and risk management initiatives.
- Expanding Geographic Reach: Extending their services to other states facing similar property coverage challenges.
- Collaborating on Risk Management: Working with high-value homeowners to implement effective risk mitigation strategies.
These options are in addition to WOWS Insurance Services initial offerings. All of these policies are fully transferable from home sellers to buyers, something that numerous realtors believe makes the policy an asset of the property. This is an industry first and major California realtors have said that being in the program could boost a property’s value.
The cost of insurance is increasing and, in some cases, pricing homeowners out. Besides putting people’s homes at risk in the event of a fire or other damaging event, this jeopardizes mortgages where having coverage is a condition of the loan.
This dilemma is negatively impacting the American dream of home ownership. We at WOWS, and with the assistance of other carriers, are working to ensure that dream will remain a possibility.
WOWS will be stabilizing the market because when you make the policy fully transferable from sellers to buyers you’re taking the fluctuation out of the market. Right now, there are two problems. Consumers are not sure if they are going to get an insurance renewal, and they don’t know if the premium is going to double or triple overnight. WOWS solves both of these problems.
These new products are coming to market at a time when one in seven U.S. homeowners are uninsured and 11.3 million out of 82.9 million owner-occupied homes (13.6%) are uninsured, a new study shows. A study from Lending Tree used Federal Emergency Management Agency data and US Census data to calculate uninsured rates. It also used FEMA data to examine uninsured rates in the 25 most at-risk counties, in which it categorized uninsured homes as an
owner-occupied home with annual home insurance costs less than $100.
WOWS Insurance Services is a Master General Agent. These partnerships enable its brokers to offer additional options to California homeowners.
WOWS Insurance Services plan is to expand beyond California to eight western states, highlighting those states like Nevada, Washington, Oregon, Utah and Colorado that all face similar wildfire risk. Their insurance markets are three to five years behind the California market.
Learn more about WOWS Insurance Services at https://wowsinsurance.com/
