These socioeconomic factors are driving up property claims

Urbanization, the increasing popularity of solar panels and a greater awareness of what is covered insurance are among the factors driving an escalation of insured property losses, a speaker suggested at last week’s CatIQ Connect conference.

“Urbanization means that we have increasing concentration of values in a small space,” said Andreas Weigel, weather peril lead at Swiss Re.

If a small-scale peril – such as a severe hail event – hits downtown Calgary today, the cost would be “massively higher now” than it would have been 20 years ago, Weigel suggested during Secondary Peril Problems and Solutions: Data, Monitoring, and Modelling, a panel held Dec. 1 during CatIQ connect.

Moderator Kimberly Roberts, senior vice president at Guy Carpenter, asked panelists about general trends, in socioeconomic and demographic factors, affecting escalating losses?

“Population is growing. insured values are growing,” said Weigel.

Other factors include social media.

“People now tend to be more aware that they might actually be able to file a claim that would have been the case 10 or 15 years ago,” said Weigel.

“This is also something which is more proactively followed up upon by service providers.”

He used a hail event this past summer in in Switzerland as an example.

“After that, I was actually approached by my garage. They said ‘hey, maybe car is damaged. maybe you don’t even see [the damage] but you can bring it to our garage for free” and use special equipment designed to detect hail damage.

“There is nothing wrong with that but it is a trend,” said Weigel.

Urban sprawl, especially in Western Canada, is another factor.

“This is sometimes underestimated. When we look at Canada we see that per year, the surface of built up land is increasing by 1.3% and if we look at Alberta, it’s 2%,” said Weigel.

“So every year there is 2% more surface that may have property that may be insured that may be damaged.”

This increases the risk that any hail storm will be over a built up area rather than open prairie or forest.

It also means every year there is 2% more surface area, where heavy precipitation would not be absorbed by the ground, said Weigel.

Weigel suggested building are becoming more resilient to risk of hurricane and earthquake.

“But this is not necessarily the case for hail so when we look at modern buildings, they tend to be, in many regions. Think of the massive increase in solar panels on roofs, which is something you see in Central Europe. These things can get very expensive in a hail storm.”

CatIQ Connect is produced by Catastrophe Indices and Quantification Inc. (CatIQ) a subsidiary of Zurich-based PERILS A.G.

The next CatIQ Connect conference is scheduled Feb. 10, 2022.