Weather damage affects mortgages and insurance

Applying AI to weather disaster coverage and claims creates problems for mortgage lenders, not just applicants, according to policyholder advocates who addressed the National Association of Insurance Commissioners (NAIC) at its August 12 summer conference.

Plaintiffs also need to be protected against predatory roofing contractors, they said. The NAIC’s Climate Task Force is looking at ways to protect insurance consumers, officials said during the session.

“AI has a lot of value. I hope to see it used by insurers identify fraud,” said Amy Bach, executive director of United Policyholders, addressing the NAIC Consumer Liaison Committee. “Right now it feels like it’s being used very much as a sword against the consumer. Insurers should be required to state deductibles at the point of sale and on the platform page as a specific dollar amount, not a percentage, so that people really understand what kind of cash they will have to come up with if their roof is damaged. .”

Roofs are integral to the value and security of homes, so insurance policies with roof coverage rules that reduce coverage or don’t pay the full cost of repair or replacement affect more than just homeowners, but also mortgage lenders, Bach explained.

“Once roofs are damaged, it’s very, very important to prevent further damage, to maintain the value of the home, to keep the mortgage collateral in good shape,” Bach said. “Coverage reductions have gone too far. We all know what happens when mortgage-backed securities are undervalued or overvalued and what that can mean for our economy.”

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A home insurance policyholder can suffer twice, explained Brent Walker, director of government relations for the Coalition Against Insurance Fraud. “The consumer can be victimized twice, once by weather, home loss or home damage, and then twice by predatory fraudsters,” he said. “There are plenty of honest entrepreneurs out there, but we will want to focus on those who see this as an opportunity to commit fraud.”

When Hurricane Debby hit Florida earlier this month, the state deployed its disaster fraud response teams under the authority of the state’s chief financial officer, Jimmy Patronis. CAIF’s Walker took note of this action and suggested using it to better support insurance consumers.

“They went door to door. They shared information with homeowners. They met with emergency management officials and local officials and they were visible,” he said. “These are excellent. Is there any way we can measure that those messages are being received by consumers and are predictable? This has been the question for many, many years. How do you measure fraud prevention? That’s a very, very, very difficult question to answer.”

insurance commissioner of california Ricardo Larawho co-chairs NAIC’s Climate and Resilience Task Force, said the group is working on a toolkit for state insurance commissioners and their departments to combine information and clarify “what are the first things you need to look at in terms of regarding consumer protection. after a natural disaster,” he said. “Just as consumers need to be aware, so do commissioners and departments.”