A relative newcomer to the catastrophe insurance space is hoping to entice more consumers to take up earthquake insurance in California.
Jon Christianson, COO at Palomar Specialty, which principally underwrites earthquake and hurricane insurance, said his company – which opened its books in 2014 – sees a huge opportunity to engage consumers with more affordable earthquake products.
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“The take-up rate, depending on who you talk to, in the state of California, is between 10 and 12%. So there’s a lot of opportunity to design products that really appeal to the 90% that don’t currently buy earthquake insurance,” Christianson said.
“When we started up in 2014 we identified those lines [earthquakes and coastal flooding] as lines of business that presented some market opportunity. When you look at both big flood and earthquake, in both those lines not everybody is required to buy them. So we pride ourselves at Palomar on product development and ways of designing insurance products that either weren’t available before or maybe that agents had a difficult time selling, so we’ve come up with some products … where we’ve been able to expand the market.”
And for brokers, that 90% uninsured figure should represent a real selling opportunity, if their carriers are able to make their products attractive enough to the buying public.
“Everybody that I have talked to about, whether it’s agents and brokers, consumers, regulators, rating agencies, government officials, banks, I think everybody is aligned in the sense that it would be great to increase that number [of earthquake insured] beyond that low number of 10-12%,” Christianson said. “We’ve done a number of things over the past few years to really open up and provide more options.”
Christianson said the earthquake marketplace was evolving, with more companies “doing a very good job” developing new products to appeal to people who had either never bought earthquake insurance before, or who had been put off by pricing and strict rules in the past. More granular modelling was one of the ways underwriters had been able to better adopt policies, he said.
“If I was an agent or broker and nine-out-of-10 times, five years ago, I was being told that the consumer didn’t want to buy, you may get discouraged that there’s not products out there that actually work for consumers. But that’s changed very recently. [New products] can give agents and brokers the opportunity to provide value-added services to their consumers … with products that they can actually sell,” he said.
Join national experts for timely discussions of natural disasters, coverage exclusions and protecting your clients from losses at CAT Risk 2017 California
on July 12
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