ILC ARTICLE

Home Insurance Claims – Covid-19 Impacts


Source: MSL

Having recently pulled together an article on the impact of Covid19 on motor claims and I wanted to turn my attention to the home claims area.

Firstly, insurers deserve a lot of credit for acting quickly when we all started working at home in our droves. ABI home insurers pledged, amongst other things, to leave cover unaffected for office-based workers who needed to work from home because of government advice or to self-isolate.

Claims During Lockdown

Whilst motor claims volumes fell off a cliff during the lockdown, the same did not happen to home claims, although the pattern of those claims did change, as might have been expected.

Theft claims reduced as many break-ins occur whilst householders are out at work, school or at various events during evenings and weekends. All of these activities, for most of us at least, were severely curtailed and we were therefore at home a great deal more, meaning that homes were far more secure.

Lockdown is also likely to have reduced the severity of Escape of Water and Fire claims (it will be sometime before the final claims costs confirm this position), given that any perils operating will have been spotted and mitigating steps taken far more quickly than they would have been had we all be sat in offices or other work places.

That is not to say that these events have reduced in frequency. Working at home for many will have meant far more extension cables around the home than usual, which brings with it increased risk.

Families who have children at home will have seen more accidental damage claims than before. A recent article highlighted a 22% increase at one insurer in damage to flat screen TV’s in the first month of lockdown.

Accidental damage to glass claims increased for the same insurer by 57%, with stones, balls and other objects causing the damage, whilst families stayed at home and took advantage of the fabulous spring weather.

Home electronics, such as game consoles and laptops have also been affected to a larger degree than normal, as have carpets.

DIY activity has been up significantly due to a reduction in available activities and the fact that so many workers have been on furlough leave. This has also impacted upon accidental damage claims.

Claims for accidental loss were lower as of course fewer of us were taking holidays and the exposure was limited for much of the period to the one hour exercise period when customers were less likely to have taken expensive equipment or jewellery out and about with them. You don’t need to wear your best jewellery to take the kids out for a walk.

Liability risks altered during lockdown, with a significant uplift in home deliveries, seeing delivery drivers and postal workers making their way up and down, in some cases, less than perfect driveways and paths and coming face to face with the odd enthusiastic dog.

Replacement items were certainly in shorter supply over the last few months as production slowed/stopped in many parts of the world, leading to either delays or an increase in cash settlements. This issue has improved significantly in recent weeks.

Loss Adjusters have done an excellent job of keeping claims moving during lockdown, using a combination of site visits (albeit in reduced numbers) and video/telephone assessments to reach settlement.

What Do Future Claims Look Like?

Like in motor, I anticipate that there will be an increase in premeditated fraudulent claims and exaggeration. Jobs are being lost and the economy is experiencing a sharp shock. There is every chance that some people will look for ways to replace lost cash or to improve aspects of their home using insurers money.

Handlers will need to be vigilant and fraud detection tools utilised. The key with fraud detection is to do it quietly in the background where possible, so as not to impact/inconvenience the vast majority of customers who are genuine.

Also stemming from the recession will be an increase in theft claims. This will likely come as people begin to slowly return to work and school.

On that theme, customers who purchased additional bikes and leisure equipment over recent weeks will need to ensure these items are properly covered as these items will be attractive to thieves in the future.

The availability of replacement items looks to have improved towards the tail end of lockdown, but this could again rear its head as an issue if the much talked about second wave rears its head. Claims in such circumstances may cost more to conclude.

The period just gone has shown us that many claims can be successfully investigated/assessed from the desk-top, mainly using video and I would expect a lot of this to stay in place in the future.

Future working arrangements might well change risk. The general consensus, certainly for office workers, points towards a blend of working from home and the office, so I’d certainly expect some of the benefits outlined above to remain in place.

You would also expect home deliveries to stay at far higher levels than they were prior to lockdown. It really feels as if we’ve hit a turning point in this regard.

Underwriters and claims teams will need to work closely to understand the changing landscape and whether there will be permanent shifts in behaviours and risk. Additionally, they will need to ensure that claims costs and durations are properly managed, whilst providing high levels of customer service

Do you agree with the factors I’ve highlighted here?

What other aspects of the claims process/cost do you see being impacted as we enter a post-lockdown world?

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