The Most Hazardous State In The U.S.
When an insurance company determines rates or an individual evaluates where to live, one factor that draws their mutual interest more than any other is whether the location is safe. Safety can be determined by a number of factors — some within human control (crime, driving, etc.) and some outside of it (natural disasters). CoreLogic has taken Mother Nature’s side of things to determine the most hazardous states in the country. They shared their top 10 in a recent blog post on the Insurance Journal website, and as it turns out, Florida is the most hazardous state in the country.
CoreLogic used nine factors in developing a single “Hazard Score.” Those nine factors included susceptibility to flooding, storm surge, hurricane winds, wildfire, earthquakes, hail, tornados, straight line winds and sinkholes. After running the algorithms, Florida led the pack with a Hazard Score of 94.51.
The next closest state was Rhode Island with a 79.67. Louisiana wasn’t far behind, logging a 79.23. Rounding out the top five were California (75.56) and Massachusetts (72.12).
Here’s the bottom half of the top 10: Kansas (69.51), Connecticut (69.04), Oklahoma (66.82), South Carolina (66.38), and Delaware (65.38).
CoreLogic notes that “extreme weather begs several important questions for both insurers and homeowners: Where do we expect these frequent and sometimes severe events to occur in the future? And, more importantly, are homeowners and insurers making sure that ample coverage is in place to protect assets and finances?”
Insurance companies may want to use the Hazard Score in the following ways:
Providing clarity to risk management
Risk management is how an insurance company stays solvent and provides much-needed services to their customers. Looking at the Hazard Score can not only help analysts determine the near-term risks, but also recognize trends over time.
Assess effectiveness of underwriting and loss control
Companies can get a better idea of how they’re paying out claims based on hard weather data.
Risk assessment across states
Obviously, the lower that a state is on the scale, the cheaper the pricing should be for customers, and the easier it will be to communicate that to customers.
- Territory price smoothing across state boundaries
- Accurate Enterprise Risk Management (ERM) assumptions and testing
- Marketing/risk selection
As far as Florida is concerned, the CoreLogic data isn’t the only burden the state’s insurance customers have to bare. In January 2014, it was revealed that 11 of the most dangerous cities in the United States were located within its borders.
More than one-tenth of the cities with the highest crime rates call Florida home. California ranked high as well at No. 2 (with 10 cities), though it came in fourth on Hazard Score. Texas and New York had five and four cities, respectively.
These numbers were tallied by Neighborhoodscout, “by collecting raw crime data from all 17,000 law enforcement agencies in America … This method provides an accurate representation of the complete number and types of crimes that truly occur within any city or town, not just crimes reported by a single municipal agency.”
While Florida has much to recommend it in terms of tourist hotspots and recreation, it also comes with a number of risks that are both inherent and manmade. Insurers utilize this data in determining rates, so keep that in mind if you are considering relocation plans.