Cyber, Fire, Flood…The Triple Threat Facing Homeowners

Nov 23, 2021 / by Linda Jancik

Severe weather, especially wildfire and flood, is increasing across the United States. This isViewpoint Masthead Graphic exacerbated by climate change with no reduction in sight. At the same time, cyber criminals, not limited by geography, can invade our homes and businesses from anywhere in the world. Insurers facing this triple threat to homeowners are keenly aware of the trends:

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  • The fire peril has been part of the Standard Fire Policy since 1943. However, with increased building and population growth in high severity wildfire areas and increased drought conditions, wildfire losses are staggering. Although fire is one of the oldest perils covered by insurance, we have a lot to learn. The industry needs to underwrite using good data, artificial intelligence, and catastrophe modelling to identify those areas most at risk and to understand which mitigation techniques have the greatest impact on preventing future wildfire losses.
  • Floods have occurred in 98% of the counties across the United States. It’s a myth that coverage is needed only when you are in a flood plain. One inch of water can cause upwards of $26,000 in damages, a significant economic hit for the average homeowner, especially if they aren’t aware that the average Homeowners policy does not cover flood.
  • Cyber threats are increasing, aided by the proliferation of technology and connectedness. The growth in working from home and increased screentime, outdated firewalls, and carelessness, has increased dramatically the number of cyber attacks. A survey from security firm Sophos reports that security breaches increased some 82% in 2020. Ransom payouts have also increased by 341% in 2020, according to The Washington Post.

A common thread here is that all three perils have increased in frequency and severity over the past three years, and there are no simple solutions. A recent AAIS survey of its Members indicated Cyber and Flood as their top two concerns. Cyber claims primarily affect businesses, but as the number of incidents spreads, the impact to individuals is expected to increase as well.

The insurance industry plays a critical role in educating policyholders, as well as providing solutions that include coverage options, mitigation services, and other ways to prevent or lessen cyber, fire, and flood losses. AAIS continues to work with industry experts to address these growing perils. Reach out to AAIS for more information.

Tags: Community, Issues & Trends, Insurance News/Current Events, Homeowners, New/Emerging Risks, P&C Insurers, AAIS News & Views, AAIS Insights, Insurance Line of Business

Linda Jancik

Written by Linda Jancik

Linda is AAIS’s Personal Lines Product Manager, responsible for product development, deployment and management for AAIS’s Personal Lines suite, including Dwelling Properties, Cyber, Flood, Florida Homeowners By-Peril and Homeowners coverages. Linda has more than 30 years of Personal Lines experience in Underwriting, Product Management, Sales and Business Operations, as well as Communications. Linda has a Bachelors degree from Utah State University.

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