Did you know that in 1996 over 45% of residential rental policies also included earthquake insurance? Today that number is a little over 5% (source). Last week I was fortunate enough to be a part of the California Earthquake Symposium hosted by Swiss Re. We had lots of creative ideas bouncing around, but as a former renter in California, that statistic stuck with me.
As an industry, insurers are extremely focused on the earthquake insurance take-up rate among homeowners, but renters make up a substantial portion of the population and our solutions should encourage this demographic to insure themselves too. Urban Californians are much more likely to be renters, compared with the national average: 42% in Los Angeles, 41% in San Francisco and 23% in San Jose (source). This is just the first piece of the puzzle; many of these renters are millennials, like me, with our own priorities and lifestyle choices.
Millennials tend to be renters for twice as long as our parents were (source). A lot of that has to do with complex market conditions, but we also don't stay in the same job or community as long as previous generations did. Gallup found that 21% of millennials changed jobs in the last year (source) and 51% of us have moved to a new city, state, or country (source). We're living in a shared economy, plus home ownership is expensive so we're more likely to rent rather than own a home. This data suggests we're less likely to put down roots and buy a home, at least for now.
Until renters make the jump to home ownership, the insurance industry should be there with an appealing product that resonates with the needs of renters - just as insurers innovate products for homeowners. The CEA provides easy to use online premium calculators but we need to go one-step further and understand why renters aren't buying polices with monthly premiums that costs less than a sandwich (source). Beyond closing the protection gap in the short term, we can teach my generation the positive habit of insuring yourself against earthquake loss so if (or maybe when) we do become homeowners, the purchase of earthquake insurance is not only familiar, but essential.
Category: Climate/natural disasters: Disaster risk, Earthquakes, Resilience
Location: California, United States