How Will Stormy Weather Impact Insurance in California?

Published on 1/17/2023 by Bar List Publishing

Strange and unusual weather has been common in California in the last five years. Dry periods have created the opening for massive forest fires, which have destroyed homes and caused lost lives, and now flooding is devastating the state. Residents in California have been rocked by strange weather events and weather patterns that have not plagued the state in the past.

For those who reside in California who have lost their homes or suffered damage to their property due to weather issues over the past five or so years, insurance has been the saving grace of the entire situation. The ability of California insurance companies to keep up with the demand for record numbers of claims has been admirable.

But the question that is in every insurance agent’s mind right now is how the weather is going to impact insurance premiums and claims in California going forward.

Coverage Questions

Insurance agents and staff alike know just how unprecedented the weather in California has been lately. As with any time that acts of God create issues with the coverage that is offered by insurance policies in certain regions of the US, some creative thinking and claims assessment is required to take care of insureds during times of crisis.

The back office of many insurance agencies will be working overtime to try and resolve the problems that Californians are having, and agencies will need to stay in touch with corporate locations to help care for their insureds effectively.

Insurance policies are created to meet the demands of the region, which means that many of the issues that California has been experiencing have been outside of the scope of the coverage that is offered to Californians.

California’s Governor Gavin Newsome has declared a state of emergency in the state, but this might not cover all of the losses suffered by insureds who usually would never have to worry about flooding.

Flood insurance occupies a unique position within the coverage of any homeowners or auto insurance policy. Many people residing in California would not have been required to have flood insurance under FEMA’s policies since the affected areas are often not in traditional historic flood mapping areas.

This leads to the question of who will pay for flooding damage in California. Weather experts are predicting a lot more rain and flooding in 2023, which has some insurance companies worried about how premiums will be taken care of.

Bomb Cyclone, Wind Damage, and Pineapple Express Storms

The damage that is expected from the combination of various predicted weather disasters could be catastrophic for the state. One only has to look at the situation in Florida from 2022 to know that insurance premiums can stack up when acts of God derail normal claims processes.

Being sure that claims can be paid by emergency funding would be nice, but there are going to be situations where insureds do not qualify for emergency aid and might not technically qualify for insurance support on their given policy. This can lead to risks to the ability of insurance companies to fund claims and care for insureds in a prompt manner.

Wind damage can be extreme during what amounts to a tropical storm, and Californians are going to be unprepared for these kinds of conditions. Most of California has never seen anything like these kinds of storms in the past. Insurance companies will need to be proactive about educating insureds about how to handle this kind of weather and what to do if their property or possessions are damaged by the coming storms.

Things to do to Educate and Take Care of Insureds

Being able to avoid huge and costly claims is key if you are an insurance agent. The more prepared your insureds are for this kind of weather, the better off everyone will be. Make sure to reach out to your insureds with advice about how to weather the coming storms and how to take care of their home when flooding or high winds are threatened.

Explain emergency planning tips, safety tips, and claims reporting processes as well. The more that your insureds know about emergency weather planning and preparedness, the less likely it will be that they will suffer catastrophic losses.

Insureds who follow advice to relocate, prepare for the storms that are coming, and take care of their own safety will be much less likely to suffer major harm.

With regard to premiums, it can be wise to advise insureds that these precautions will help make sure that claims can be paid out on and that premiums will remain affordable. Everyone needs to work together to make sure that insurance claims can take care of the needs of everyone who has been impacted by the weather.

Communication with insureds is key, and making sure that your agency shows up for its insureds will also build confidence in your clients when the going gets really tough.Expect that people will be scared, upset, and confused and go the extra mile to help them prepare for the bad weather that is likely coming.

Strange Weather is Going to Batter California Throughout the Next Few Months

For better or worse, there is going to be more strange weather and unexpected emergency weather events in the state of California during the early part of 2023. The better prepared that insureds are for these challenges, the better off insurance agencies will be when disaster does strike.

Helping insureds to prevent major damage to their property and potential loss of life is a key aspect of caring for your clients when you have an insurance office.

While it is likely that claims processing times will be longer than normal and that the issue of payment for claims will become complex, California is likely to get through this rough patch without suffering the multi-faceted struggles of the state of Florida.

Making sure that claims are reported correctly, managed effectively, and that insureds are communicated with promptly can make a big difference in the ability of insurance agencies to weather the coming storms.