Avoid the cycle of ‘Lather, rinse, repeat.’ How to convince clients to build back better 

If insurers want customers to upgrade their properties and make them more resilient to natural catastrophe perils, they should talk to their clients during — not before or after — a loss event, experts at a July 22 Accenture panel discussion said. 

Otherwise, failing to invest in property resilience leaves homeowners trapped in a costly “lather, rinse, repeat” cycle of damage and rising insurance premiums, panellists said during the Business case for investing in resilience session at the Accenture Toronto office.  

Canada’s property and casualty insurance industry has long raised concerns that prodding and incentivizing insureds to reduce their risks works better in theory than in practice. 

Consumers’ hesitancy to act on catastrophe resilience measures could come down to a combination of factors, including cost concerns, lack of risk awareness, and human nature. 

“[You] have to have that conversation when the loss is happening. It’s not a conversation you have after the roof has been repaired,” says Lisa Guglietti, executive vice president and chief operating officer of Co-operators.  

However, customers feel stress and anxiety when a claim occurs, so the message may not sink in right away. That’s where not only insurer timing, but persistence, is key.  

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“Clients are generally in a moment of crisis when they’re having a claim. So you can be having a really logical conversation with them, but they may not be processing at all,” she says. “It might take one or two conversations.” 

If rebuilding to a better resiliency standard takes more money and time, clients may look for the easiest path to completion. This is a natural inclination insurers should advise clients to guard against. 

One of the biggest issues in a claims environment is that when the client’s roof is off or the basement is flooded, clients will choose short-term speed of repair, or long-term resiliency of the rebuild, says Paul Gilbody, president of ClaimsPro. For example, he says, if a claims professional tells a client, “’It’s going to take a week to do that in a traditional way…and a month to do it in a sustainable way,’ I’m not sure very many people will choose the month.”

Education intervention

Many homeowners underestimate their exposure to climate-related perils like flooding. Consequently, they don’t see the urgency or necessity of investing in mitigation. 

But educating clients about their risk exposure can significantly influence their decision to upgrade or install better resiliency measures, even for clients in high-risk zones with high premiums. 

“We’re tracking our claims diligently,” says Guglietti. “We understand take-up, we understand client behaviour — and we have seen through some of our other products that once clients are educated, you’d actually be surprised at what they would do.” 

Guglietti says Cooperators’ offers flood in its comprehensive water coverage. Ahead of this product rollout, company representatives spoke directly with clients in the high-risk zones to ensure they understood their exposure. 

“It was about them understanding the risk they were exposed to, and then making a series of choices, including not buying the coverage,” she says. “We were actually quite surprised at some of the take-up rates…once clients understood that they had that risk.” 

Affordability remains a barrier for some, but many clients were willing to make the investment after evaluating the risk to their homes. “Once clients understand their risk, it’s somewhat surprising sometimes that they will act on it,” she says. 

Giving clients examples of repeatedly-paid claims for similar damage to comparable properties helps clients to visualize the long-term costs of not investing in resilience. 

“We’ve shown them the example of the roof that we replaced two or three times. We’ve shown them the example of the farm that’s been dented by hail, and we’ve replaced it two or three times,” Guglietti says. “Like, kind, and quality. It’s lather, rinse, repeat.” 

“That also challenges the premise of, ‘If something goes bad for you, we’re going to put you back exactly or as close to the way things were,’” says Phil Gibson, panel moderator and senior executive advisor at Accenture Canada. “Sometimes the way things were is right back in the floodplain, or right back in where the wildfire hit you the first time…right back in the hail belt with those asphalt shingles.”

Alyssa DiSabatino

Alyssa Di Sabatino has been a reporter for Canadian Underwriter since 2021, covering industry trends, market developments, and emerging risks.