Property insurers could be setting inaccurate premiums for millions of U.S. homes because they don’t account for the actual condition of a home and its ability to withstand severe storms, a leading provider of disaster-modeling software said in an analysis Tuesday.
Many major insurers rely on a handful of property characteristics to estimate likely damage from hailstorms or strong winds, a new white paper by data-analytics company Moody’s says.
But insurers are using only approximations for other qualities such as roof condition that are crucial to predicting damage from such storms, the paper says. Examining 1 million properties using details such as exterior material, tree cover and roof age, Moody’s found about half were inaccurately rated.
“Data quality remains a challenge,” said Tom Sabbatelli-Goodyer, a director of product management at Moody’s. “The output is only as good as the input.”
