Lightning-Related Homeowner Claims Dropped in 2013

Insured losses to homes from lightning strikes in the United States fell to their lowest level in a decade last year, as severe thunderstorm activity eased from near-record levels and dry weather prevailed throughout much of the western half of the country. Despite the respite, insurers still paid $673.5 million in lightning claims to more than 100,000 policyholders in 2013, according to the Insurance Information Institute (I.I.I.).

Although total insured losses from lightning were down by nearly one-third (30.5 percent) in 2013, the decline since 2004 is a much more modest 8.4 percent. In the prior three years (2010 – 2012), home insurers paid approximately $1 billion per year, on average, to policyholders.

An analysis of homeowners insurance data by the I.I.I. and State Farm found there were 114,740 insurer-paid lightning claims in 2013, down 24 percent from 2012. The average lightning paid-claim amount was also down in 2013, slipping by 8.3 percent to $5,869 from $6,400 in 2012.

The decline in lightning damage last year is consistent with data from the National Weather Service, which recorded 137 days in 2013 with lightning causing property damage, while 160 such days were recorded in 2012—a 14 percent decrease.

The incidence of lightning claims last year is also a continuation of a downward trend. Since 2004, the number of paid lightning claims is down nearly 60 percent over the nine-year period through 2013. The sustained decline in the number of claims may be attributed to an increased use of lightning protection systems, technological advances, better lightning protection and awareness of lightning safety as well as fewer lightning storms.

“While this is good news for homeowners, lightning is still an extremely costly weather-related event,” warned the I.I.I.

HOMEOWNERS INSURANCE CLAIMS AND PAYOUT FOR LIGHTNING LOSSES, 2004-2013

($ millions) Average Cost per Claim 2004 278,000 $735.5 $2,646 2005 265,700 819.6 3,084 2006 256,000 882.2 3,446 2007 177,100 942.4 5,321 2008 246,200 1,065.5 4,329 2009 185,789 798.1 4,296 2010 213,278 1,033.5 4,846 2011 186,307 952.5 5,112 2012 151,000 969.0 6,400 2013 114,740 673.5 5,869 Percent change, 2004-2013 -58.7% -8.4% 121.8% Percent change, 2012-2013 -24.0% -30.5% -8.3% Source: Insurance Information Institute, State Farm.

Despite the drop in the number of paid claims in 2013, the average cost per claim rose nearly 122 percent from 2004-2013. By comparison, the consumer price index rose by 23.3 percent in the same period.

The average cost per claim has generally continued to rise, in part because of the huge increase in the number and value of consumer electronics in homes, according to the I.I.I.

TOP 10 STATES WITH ESTIMATED NUMBER AND COST OF LIGHTNING CLAIMS, 2013

($ millions) Average Cost per Claim GA 11,184 $56.0 $5,007 TX 6,419 54.2 8,436 NC 5,711 34.1 5,965 LA 5,547 21.6 3,902 AL 5,199 34.8 6,702 PA 4,483 22.4 4,987 TN 4,317 23.2 5,381 SC 4,011 23.1 5,755 OH 3,942 17.1 4,344 IL 3,849 25.6 6,646 Top 10 54,662 312.1 5,709 Other 60,078 361.4 6,015 U.S. 114,740 673.5 5,869 Source: Insurance Information Institute, State Farm.

The I.I.I. noted that Georgia was the top state for lightning claims in 2013. The state had an estimated 11,184 claims paid to policyholders, totaling $56 million. Texas, however, had the highest average cost per claim at $8,436, but had about one-third fewer claims than Georgia.

Source: I.I.I., State Farm