Ohio Insurance Companies Adding Wind, Hail Deductibles

July 28--The growing number of severe storms related insurance claims over the past five years is prompting some Ohio companies to start asking homeowners to pay a separate deductible for wind and hail damage, state and industry insurance officials said.

More Ohio insurers have started implementing wind and hail deductibles over the past 18 months to two years, although the total number to make such changes wasn't immediately available, said Robert Denhard, a spokesman for the Ohio Department of Insurance, a state consumer protection agency.

Most companies have implemented this change for both new and renewal business, Denhard said.

The concept of a wind-hail deductible that differs from the all-other-perils deductible has existed for years in Ohio and other states, especially in coastal regions, officials said.

Insurance companies such as Columbus-based Nationwide have introduced mandatory deductibles for wind and hail damage, while other such as Allstate have introduced such a deductible as an option for policy holders.

Ohio has seen "significant claims" related to storm damage in Ohio over the past five years, said Mitch Wilson, a spokesman for the Ohio Insurance Institute, an industry trade organization.

"There is a new normal out there regarding disaster risk in Ohio, especially due to losses associated with wind, rain and hail," Wilson said. "Insurers are looking at ways to reduce costs and keep policies affordable."

The National Insurance Crime Bureau reported this month that U.S. insurance claims resulting from hailstorm damage increased 84 percent last year from their 2010 level. Nationally, there were 861,597 hail claims in 2012, up from 467,602 in 2010. More than 2 million hail damage claims were processed from Jan. 1, 2010, to Dec. 31, 2012.

Ohio ranked in the top 15 states for hail claims all three years, with a total of 74,826 claims for 2010-12, according to the state Insurance Institute. Ohio ranks 11th in comparison to all other states for hail claims filed during the three-year period, officials said.

Ohio insurers, based on their exposure to wind and hail losses, are seeking was to defray the cost of future storms based on what has occurred over the past several years, Wilson said.

Ohio disaster-related insured loss estimates for the five-year period from 2008 to 2012 are more than 2.5 times higher than the previous period from 2003 to 2007, according to institute data. The current five-year estimate is as much as $3.5 billion, compared to $1.3 billion for the previous five-year period.

Four of the five costliest years for Ohio insured losses have occurred in the past five years. The Hurricane Ike-related windstorm on Sept. 14, 2008 is the costliest Ohio natural disaster in recent times with $1.25 billion in insured losses.

Wilson said some companies are raising homeowners insurance premiums upon renewal, while others are looking at instituting wind and/or hail deductibles similar to other states. In addition, some Ohio insurers also are phasing out replacement cost for older roofs in favor of the replacement cost less depreciation, much like an automobile policy, he said.

Homeowners typically are notified about such changes at the time their policy is renewed.

Allstate introduced its optional wind and hail deductible in Ohio several years ago, said Meghan Cass, a company spokeswoman. The change is not correlated to more severe weather here in recent years, she said.

"It is really just another way for customers to manage their premium and their risk," Cass said. Policy holders who choose the deductible would pay lower premiums, she said.

The Ohio Insurance Institute plans to survey its members to determine how many of them have implemented wind and hail-related coverage changes, and how those programs are operated. The survey results should be available in four to six weeks, Wilson said.

Ohio ranks the sixth lowest among U.S. states for the cost of homeowners insurance, based on average insurance premium expenditures compiled by the National Association of Insurance Commissioners. The average 2010 Ohio homeowners insurance cost was $614, compared to the U.S. average of $909, according to Ohio Insurance Institute figures.

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