MReport July 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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46 | TH E M R EP O RT SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Adapting to Changing Weather Patterns How did a decade's worth of disasters impact insurance rates? W ith natural disasters impacting everything from delinquency rates to property preservation, there's no question that the state of the weather will continue to be a critical factor for the industry to watch and adapt to in the years ahead. A new report from LendingTree's QuoteWizard recently put the long-term effect of disasters on home insurance rates under the microscope, finding an increase of as much as 88% between 2007-2016. Working from the National Association of Insurance Commissioners' (NAIC) annual report on insurance trends and stats, QuoteWizard compared annual home insurance rate data from the 2016 report (the latest full-year data available) to the that from NAIC's 2007 report. The report found that almost two- thirds of home insurance losses come from wind, hail, and water damage, and added that states in the Midwest experience severe weather more frequently, leading to higher insurance rates. "Every year in the United States, natural disasters account for tens of billions of dollars in damages," the report reads. "A significant portion of those damages falls on the shoulders of insurance companies. When insurance companies experience huge loss from natural disaster- related claims, they compensate for that loss with an increase in home insurance rates." Between 2007–2016, Kentucky saw the largest increase, with insurance premiums rising 88% to $1,085 in 2016, up from $578 in 2007. Although Kentucky is not located in Tornado Alley, it is no stranger to severe weather, and those events are becoming more common in the southeastern United States. According to QuoteWizard, $10-bil- lion tornado events are not uncom- mon, and southern states have "the greatest potential for increased tornado disasters by the end of the century." Oklahoma saw its premi- ums increase by $821 over that decade—the highest dollar-amount increase in the nation. While Oklahoma is less than half the size of California, it had declared 189 natural disasters since 1955, according to FEMA. According to the QuoteWizard report, Louisiana had the high- est reported premium in 2016 at $1,967, which is a 41% increase over 2007. Nevada's 7% increase in pre- miums since 2007 was the lowest in the nation, resulting in premi- ums rising $47 to $742. Oregon's reported premium of $659 was the lowest in the nation.

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