In the insurance world, knowledge is power. Yet, there’s a significant gap in understanding earthquake insurance, which has far-reaching consequences for agents and their clients.
GeoVera CEO John Forney reveals the critical insights that most agents often miss and why addressing this gap is not only in the best interest of agents and their clients but also financially rewarding.
The Earthquake Insurance Knowledge Gap
“What is one thing about the earthquake insurance market that most people don’t know?”
That was the first question of the Q&A session following my portion of the keynote panel at September’s Agents Alliance Conference in Palm Desert. The response was easy:
“What most agents don’t know about earthquake insurance is that at least 50% of your customers don’t know that their homeowners insurance doesn’t cover earthquake, and they’re going to come looking for you after they have a loss!”
Undersold: A Homebuyer’s Earthquake Insurance Experience
Think I’m exaggerating? No way. If anything, I’m understating the extent of the problem. Anecdotal evidence:
- My experience as a first-time CA homebuyer in July 2020 (and by the way, my home was in a neighborhood in South Napa that suffered damage during the 2014 earthquake):
My agent did not know I worked for an earthquake insurance company. She never mentioned the word earthquake during the process that led to my purchase of a Nationwide HO3 policy, nor did she tell me that that policy did not cover losses from earthquakes. Thirty days letter I received the CEA mandatory offer (15% deductible, $5000 contents coverage). Because of my job, I knew what it was, but for the uninitiated homeowner I’m sure it looks like junk mail and is routinely discarded. I bought a GeoVera policy, of course!
- Informal polling of agents:
Since I became CEO of GeoVera we have hosted at least seven agents’ roundtables/dinners to understand better the dynamics of the retail market for earthquake insurance and to thank agents for doing business with us. At each one I ask for a show of hands for every agent that offers earthquake insurance to every HO3 customer. Consistently, only about 1/3 of the hands go up!
Will there be a big earthquake?
According to the third Uniform California Earthquake Rupture Forecast (UCERF3) report, before 2044 there is a:
- More than 99% chance that one or more M6.7 or greater earthquakes will strike somewhere in California
- 75% chance one or more M7.0 or greater earthquakes will strike Southern California
- 76% chance one or more M7.0 or greater earthquakes will strike Northern California
Why sell earthquake insurance?
- See above.Your customers need it!
- Protects you from E&O claims.
- Generates additional revenue.
- Policy lifespan typically very long.
- Additional customer touchpoint.
Why Sell GeoVera?
- Strongest financial strength rating of any carrier writing residential earthquake insurance in California: “A” (Excellent) from AM Best. Just reaffirmed in July 2023.
- Longest-tenured writer of standalone residential earthquake insurance in California: first policy 1995, before the CEA was created.
- Only major residential earthquake provider with an internal CAT claims department – and ALL our adjusters are CEA-certified.
- Best-in-class underwriting: our Chief Underwriting Officer has a Ph.D. from Stanford in Civil Engineering with a concentration in Earthquake Engineering.This subject matter expertise means each risk is evaluated and priced correctly.
- Most product flexibility:our combined single limit “Cadillac” product is unique in the industry – no one else offers it. We augment this with offerings of flex-limit products at a much more affordable price point and with maximum coverage flexibility.
The importance of earthquake insurance can’t be overstated, particularly when we consider the looming seismic risks in California. It safeguards you against errors and omissions claims, generates additional revenue, offers policies with impressive longevity, and provides an extra touchpoint with your clients.
Thank you for partnering with Geovera – where your best interests and your clients’ safety come first.
Download our PDF reference guide to learn more about GeoVera and how to effectively cross-sell earthquake coverage.