Will emergency preparedness courses help reduce weather-related property losses?
Last year, the New York State legislature passed a bill that would permit property insurers to lower premiums if homeowners completed an emergency preparedness course and outfitted their homes with fire and disaster prevention devices, such as sprinklers and storm shutters. The law took effect on January 1, but New York is making a renewed push for policyholder education.
In a circular sent out in mid-March, the state’s Department of Financial Services (DFS) has urged for all property and casualty insurers, insurer trade organizations, rate service organizations, and the New York Property Insurance Underwriting Association to submit their disaster prevention curriculums to the department for approval. Participation is voluntary, according to DFS.
Reduce Risk Exposure
The purpose of the courses goes beyond simply providing homeowners with valuable knowledge. By educating homeowners and renters on ways to fortify their residences against natural disasters such as hurricanes and floods, as well as theft and fire, New York State aims to reduce property damages and prevent loss of life stemming from catastrophic events. Last year’s record property losses in the U.S. — $175 billion by CCC Information Systems’ calculations — no doubt persuaded regulators to take aggressive measures to reduce those astronomical payouts.
Incentivizing policyholders to be proactive in protecting their properties may be one way to accomplish that. In exchange for taking the emergency preparedness course, homeowners receive a break on their premiums. The DFS, in turn, must approve any discount proposed by the insurer once a policyholder completes the class.
“The insurance company can look at it and say, ‘This person that we’re insuring has taken that extra step to try and protect their property,’ “Kathleen Weinheimer, SVP of the Independent Insurance Agents & Brokers of New York, told WHEC.com.
As sketched out in the DFS memo, the course will instruct homeowners and renters on steps to take before, during, and after a natural disaster that could minimize property damage. That could entail installing certain equipment and devices, such as hurricane-resistant laminated windows and doors, as well as improving the property’s structural resiliency. Classes would not be limited to weather-related events; home safety measures to prevent theft, fire, and injuries would also be covered.
Should Your Clients Take a Preparedness Course?
The short answer is, if one is available, why not? They have nothing to lose, and a premium reduction to gain if they live in New York State. But even without a rate discount, knowing how to avert extensive damage means less money spent on expensive home repairs possibly not be covered in their policy.
The New York State program also emphasizes the importance of knowing your homeowner clients’ insurance needs. If they live in a flood or hurricane-prone area, talk to them about undertaking measures to protect their homes against severe damage. Make sure they understand exactly what is covered in their homeowner policy and explore of the possibility of adding extra coverage in case of a catastrophic event. If an emergency preparedness course is nearby, urge your clients to take it. If not, provide them with pointers on how to insulate their homes as much as possible when harsh weather hits.
And when an unforeseen catastrophe occurs, offer your assistance by helping them file their claims so they can quickly fix their homes and replace their possessions. While new digital platforms speed up the filing process, your clients still want the assurance of speaking to a real person in a time of crisis.