In Evolution of the Roof Risk Part 1: the Roof Problem, BuildFax (a company serving the insurance industry with national building, remodel, and repair data) co-founders, Holly Tachovsky and Joe Emison outline the multiple causes for a sharp increase in insured losses due to thunderstorms. The reported losses amount to $27 billion in 2011 and $14 billion in 2012, up from just 5 billion a decade ago. The problem, the authors argue, is somewhat of a perfect storm convergence of increased roofing costs, aging houses, more storm activity, and possibly a rise in roofing scams. According to the article, the problem is exacerbated by insurance company policies to grow business by increasing the number of customers. The report argues this will only increase the chances of "writing bad risks" and lead to higher losses for the industry.
The solutions? For the BuildFax suggestions, we'll have to wait for Parts 2 and 3, which we'll link to here in coming weeks. But there are troubling signs to suggest that insurance companies may be trying to solve the problem by paying fewer premiums. One pro-roofer forum turned up several discussions that point to recent and surprising changes in insurance policies, including assessing multiple deductibles and opting for repairs over replacements, even denying coverage on initial response (sometimes perhaps illegally). At the same time, legislation in several states, including Kansas and Oklahoma , and recent lobbying by the insurance industry in Texas, seeks to control the purported rise in "storm chasing" activities by placing restrictions on roofing companies. The Oklahoma law, which would require roofing companies to buy a $30,000 bond, is seen as the most costly to roofers. All this proposed legislation occurs in states that do not require roofers to be licensed. While there might be good arguments for requiring licenses for roofing contractors that are supported by roofers, the proposed regulations in these states is being pushed as a deterrent to scam artists with strong support from the insurance lobby.