Now, hear me out. This certainly isn't what anyone residing in catastrophe-prone states like Florida, California, Texas, Louisiana, Colorado and Friends wants to hear, but it is a fact. Don’t just take it from me. Arguably the most influential individual in the property insurance space, Evan Greenberg (CEO of Chubb), explained as much to a very large room at RISKWORLD in San Diego earlier this year, where I was fortunate enough to have a seat. Specifically, he highlighted that "the insurance pricing environment is likely to continue its upward trend due to rising loss costs from inflation, higher court awards, and climate-driven claims." He continued by warning that "public policy in the U.S. could create tensions if regulators in catastrophe-exposed states curb insurance rate increases. If insurers are not allowed to price adequately or manage their risk concentration, they might withdraw from those markets, threatening the availability of private sector insurance." Sound familiar? 

So, what do we do about it? Simply put, we must all play our part in making our buildings, laws, and mindsets as resilient as possible while shifting to a predict-and-prevent mentality. Beginning at ground zero, building owners must take it upon themselves to make their properties as resilient as possible, so they are in a position of strength when the wind blows or the fire burns, and when transferring their risk to the markets. At the state and federal levels, lawmakers must continue to dedicate themselves to truly understanding the factors at play and, in turn, legislate towards more impactful outcomes. Furthermore, producers, underwriters, and claims professionals must embrace a pre-loss focus over a post-loss response, while easing the transfer of vital information that has been siloed for far too long. Contractors also have a role to play here. The days of excessive profit margins demanded by certain storm chasers must give way to a focus on year-round risk hardening and the more sustainable business model this will afford. 

Deft is committed to doing our part, which we've shown through our actions over the past few years as we pivot more and more to an organization focused on pre-loss diligence while standing at the ready to respond to mother nature's wrath and the occasional non-cat water loss or fire which slips through despite our best efforts. We have enough of a sample set of data at this point to hedge towards risk management informed by claims experience as opposed to a claims organization that can assist with underwriting if called upon to do so. Furthermore, we are confident that we are inching closer to our goal of bringing every claim outcome within a standard deviation (with the mean being true indemnity). Once the latter is achieved, capital will follow, and we'll be well on our way to sustainable insurability. In other words, transferring risk to insurance markets in catastrophe-prone states certainly won't be cheap, but at least it will be more predictable and measurably more sustainable. 

-JK