When it comes to homeowners fire zone insurance, more than six million people in the United States are just hoping and praying. They have opted not to pay rates they consider too high. It’s not a good strategy.
A home is generally the greatest asset people will ever own. And no matter how much insurance they have, it’s never enough.
Think about it…if you are at your office and your home is totally destroyed, the only pair of shoes you’ll own are the ones you are wearing. It’s both poignant and painful. Powerful when thought of in that context. A valuable lesson indeed. And one you don’t understand until you’ve gone through it. Or watched others do so.
Even worse, even homeowners who believe they are adequately insured to rebuild after a fire often learn that, because things have changed, they are not fully covered to be able to rebuild. It’s not necessarily anyone’s fault. Things, times and prices have changed. Unless you increased the amount of coverage you had, and many homeowners are doing the opposite, you are not prepared. That’s because all of the costs involved in rebuilding have escalated: labor, wood, concrete, steel, etc.
The insurance industry needs a new blueprint. It’s a pressing need, and not just in the state of California but also throughout the United States where home insurance rates have increased nearly 38% since 2019 according to a recent NewsNation story. We’ve even heard of multiple cases where the homeowner is paying more for insurance than their monthly mortgage. That’s crazy.
It’s an ideal example of Einstein’s theory of insanity: doing the same thing over and over and expecting a different result. Instead, it just becomes more so.
That’s why insurance companies are cutting back and pulling out of markets where they can no longer afford to sustain significant losses. The fire risk landscape is constantly evolving and the insurance industry needs to change with it.
We do not believe that California Insurance Commissioner Ricardo Lara’s recent insurance company requirement will adequately address the problems. And popular opinion is that it will cause a significant increase in rates. That’s definitely not positive for homeowners.
It’s absolutely time for things to change. Homeowners insurance needs to be reengineered. Change is not only possible but also essential. That’s the solution to this serious issue.
My opinion is that it’s not only essential but also possible to reengineer homeowners’ insurance. My partners, Joel Silver and Drew Engler, and I wholeheartedly believe this. That’s why we recently launched WOWS Insurance Services, specializing in fire zones and areas where insurance is difficult to place.
The solution is to spread the risk.
With WOWS Insurance LLC, each company will hold a portfolio of California homes, diversified by location. This allows us to make a really unique offering that lowers the risk to the reinsurers. So premium charges can be reduced over time. Properties will be grouped together so the homes in each portfolio have similar fire scores and values.
WOWS has identified over 293 different areas in California alone within its risk profile, with no more than one home from each area in each portfolio.
We’ve been able to show that, from an actuarial standpoint, even if it’s the highest of high fire scores, the spread of risk is 100 times more important than the fire scores themselves.
Technology solutions aid in addressing this rapidly and constantly unfolding environment. Success to big data cutting-edge analytic solutions and location intelligence assist us in doing so. This allows for a creative approach to addressing the proximity or spacing of homes, one that is more sustainable and, over time, will reduce the cost for homeowners.
WOWS Insurance Services has launched an innovative new product that provides homeowners coverage for high end properties in the state of California and is leading the way for the insurance industry to change. We are also planning to go into Nevada and six other Western states. As a result, insureds can get protection and ease skyrocketing homeowners insurance costs, saving up to six figures.
Learn more at https://wowsinsurance.com/.
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