4 tips for agents as they help consumers navigate natural disasters and rising costs

Home insurance is a homeowners' security blanket, offering financial protection against damages or losses to a home and belongings due to events like a fire, theft, or natural disasters. Yet, 12% of American homeowners remain uninsured. So what factors are at play?

The combination of unpredictable weather patterns, inflation and rising premiums creates a perfect storm of challenges for homeowners. Meanwhile, insurance agents are feeling the effects too–walking a fine line between offering adequate protection and affordable premiums.

Here's why the homeowners insurance market is putting strain on homeowners and agents:

First, unpredictable weather patterns are becoming increasingly frequent. Forecasters predict an 85% chance that this Atlantic hurricane season will be one of the most active hurricane seasons, estimating 17-25 named storms and 8-13 hurricanes. Meanwhile, wildfires also pose a major threat. Researchers reviewed 21 years of data collected by two NASA satellites and concluded that extreme wildfires have doubled in the last two decades. 

One thing we do know: having adequate home insurance coverage is more crucial than ever. 

"Now more than ever, effective communication and a strong relationship between clients and their insurance agents is critical. Following a natural disaster, insurance agents are often among the first calls homeowners make. Agents stand by their clients during the most challenging times, taking pride in ensuring peace of mind before disaster strikes," said Kevin Brandt, executive director of Trusted Choice. 

Second, rising costs of homes and construction is impacting the homeowners market. The cost and value of homes, construction materials, labor, and living expenses, have risen significantly. The increased demand for building materials, combined with supply chain distribution and labor shortages, has forced construction companies to offer higher wages to attract and retain employees. 

Together, these factors are leading to higher premiums–especially in high-risk states prone to natural disasters. In some locations, insurers are even opting out of providing home insurance coverage to consumers.

As these challenges evolve, insurance agents must adopt effective strategies that address clients' concerns and ensure that adequate coverage is provided.

Tips for agents

The growing number of uninsured homeowners highlights the urgent need for effective communication with clients and their agents to provide comprehensive coverage. Here are some tips for agents as they help consumers navigate the current landscape: 

1. Review & update policies: Agents should encourage clients to update their policies annually. Advising policyholders to update their coverage plan to match their current rebuilding cost is critical. Being underinsured can lead to severe financial consequences if a disaster occurs.
   
2. Coverage options: Insurance agents must remind clients that full coverage does not necessarily mean fully covered. Clarify what's covered in a home insurance policy and what's not, and explain that additional coverage options like flood insurance, windstorm coverage, or extended replacement cost coverage may be necessary. 
   
3. Communicate clearly & effectively: Explaining the reasons for increased premiums and the necessity of sufficient coverage can be a delicate conversation, as clients may be hesitant to pay higher premiums. Agents need to navigate these discussions with sensitivity and clarity. Understanding a policyholder's concerns and addressing them with empathy can help build trust and maintain a strong relationship. 

4. Relationships & reputation: Building relationships with policyholders and industry professionals, is essential for maintaining a solid reputation that can attract new business. Among the actions you can take: leverage social media as a professional showcase, attend industry conferences, and seek media opportunities. 

Navigating with ease and understanding

Insurance agents play a critical role in guiding clients through these turbulent times, ensuring they understand their policies and the importance of sufficient coverage. Despite the difficulties, agents are committed to supporting clients, adapting to market changes, and leveraging technology-based solutions to enhance customer relations. By collaborating closely and staying informed, both consumers and agents can position themselves to manage risks effectively and ultimately secure a more stable future.