New England insurance agents are preparing to remarket several clients’ homeowners policies as an increasing number of insurers send out cancellation notices following last year’s record-setting snowfall.
According to a Boston Globe report, those cancellations are going to policyholders who filed large claims this year, multiple claims over the past few years, or both. And while nonrenewal notics are just beginning to trickle in, agents expect an even larger number in the new year.
“It’s the tip of the iceberg,” Karen Roan, home and auto insurance manager at Rodman Insurance Agency, told the newspaper. She said carriers are evaluating whether they can recover their losses through rate increases or through casting off high-risk clients.
For those who are losing their insurance, the choice is either more expensive coverage through another commercial insurer or a policy issued by the surplus lines market. That choice is becoming increasingly more common, according to Tom Skelly of Deland, Gibson Insurance Associates in Wellesley Hill.
His agency has placed five customers with the state’s high-risk pool this year, compared with an annual average of fewer than three. Another insurance agency owner in Canton, Massachusetts has remarketed six customers this year – a task he usually has to perform just once or twice.
“People who are not so good [risks] squeaked by in the past,” said Joseph Galvin. “Now it’s hit the fan.”
Galvin noted that most insureds who have their policies canceled end up in the non-standard market, as insurers are often loathe to take on risks rejected by their competitors. Outside the traditional market, customers can end up paying twice as much in premiums.
The nonrenewal notices come as California homeowners face similar difficulties in the wake of wildfires that have ravaged much of the state.
The wave of cancellations has fueled outrage against the insurance industry though trade group Insurance Information Institute assures that industry-wide, insurers renew more than 99% of policies.
“Nonrenewals are on a case-by-case situation, and they are not that common,” said III President Robert Hartwig. “It’s not typically a single claim or single storm season.”
Even so, a cancellation notice is not necessarily the end. Consumers can negotiate, perhaps increasing their deductible or making repairs to the home that will insulate it against further risk, Galvin said.
