Everyone is talking about the roof risk problem. It is the hot topic among both insurance and reinsurance carriers, as well as vendors. BuildFax conducted interviews with industry experts ─ from the C-suite to actuaries, underwriters to adjusters, to inspectors and agents ─ in order to identify the current trends in solving the roof problem, which we detail in a white paper and in this two-part series for Claims Journal. So what is everyone talking about?
1) The Age of Roof Characteristics. The roof was once just part of the overall risk. Rarely was it viewed as a separate risk, much less a composition of risks. Enter the new age of roof characteristics. Carriers want to break the roof risk down – when was this roof constructed, who constructed the roof, what materials were used, how was the roof constructed. We see time and again, especially any time the good folks over at the Institute for Business and Home Safety (IBHS) enter the lab, that construction and materials matter! IBHS has played an important role in researching and identifying good versus bad roof materials, spurring carriers to act.
2) Inspection Innovation. Years ago, most companies said “yes, we inspect.” That was the extent of the inspection program. But now that we know what to look for in this age of roof characteristics, there’s a shift to have inspectors look for it. The market is seeing innovation in the inspection process ─ not just more inspections, but smarter, more strategic inspections. Like the advancements in Florida’s wind mitigation inspections, national carriers see the need for certified inspectors in fixing the roof problem, along with data-driven analytics to know which properties to inspect and when (like recent building activity), hyper-specific inspection criteria (based on location based hazards and property history), and finally, more documentation (from photos to checklists).
3) Changing Eligibility Requirements. Are carriers’ products accounting for increased concern over roof risk? The answer is “yes” and the most direct path is by way of changing eligibility requirements, most commonly roof age. Armed with useful data on the impact of various roof characteristics on likely future loss, carriers are able to make underwriting rules to address the roof problem by excluding certain roof characteristics from coverage as well as roofs of a certain age. More carriers offer Actual Cash Value (ACV) cost on the roof, including offering policies that provide replacement cost coverage up until the roof is a certain age and then providing ACV after that. Carriers are exploring a separate roof deductible and having cosmetic exclusions, as well as increasing their focus on partial roof repairs as opposed to full roof replacements.
4) Buyer Beware of Storm Chasers. Storm chasers are much bigger and more aggressive than before. These roofing businesses, that go door-to-door in areas hit by storms (both immediately after, and, during slower periods months after storms) to do roof repairs, have exacerbated the roof problem and may be acting fraudulently by actually causing damage to the roof (under the pretext of “going up there and checking things out”) and/or by taking the claims check and not actually doing any repairs (or doing a terrible job). Unfortunately attempts to shut down storm chasers by way of law enforcement, consumer protection enforcement, and codification of better business practices, are not substantive in preventing the practice.
Part 2, scheduled for August 29 , will describe the top four up-and-coming trends in solving the roof risk problem.
By Holly Tachovsky, CEO and Joe Emison, chief technology officer. BuildFax collects and organizes construction records on millions of U.S. properties.
Emison oversees BuildFax’ cloud architecture and frequently speaks on cloud architecture, scaling in the cloud and cutting costs in the cloud.