So They Claimed
Electronics and jewelry topped the index of highest-value U.S. contents claims in 2010.
With this issue, Best's Review launches the Enservio Contents Claims Index.
Published exclusively in Best's Review, the index is derived from Enservio's database of 14 million individually appraised personal and business items reported by 200 U.S. property/casualty insurers.
Enservio aggregates and analyzes contents claims. Trends emerge from looking closely at what is most often reported lost, damaged or stolen.
Electronics topped the index, accounting for 16% of total insured value reported. Within the category is an insight into today's domestic lifestyle: TVs and computers represented about half of these losses.
Jewelry losses spiked during the past two years, nearly eclipsing the total dollar value of electronics claims.
Claims are high because jewelry is "a high-dollar item, very small and you don't have to substantiate it when you lose it, as long as it's not scheduled," Enservio's chief executive Jon McNeill said. "So what we see is people using ‘my diamonds fell down a drain pipe' as a funding mechanism during an economic downturn."
The quality of the goods claimed also raises questions. "If you look at commercial data, Rolex's U.S. market share is actually less than 1%, yet over 4% of all watches claimed are Rolexes. So that gives you some pause," said Enservio's marketing director, Rob Halpern.
Sporting goods also are often claimed, Halpern said, especially bicycles and golf clubs. Both usually are lost to thieves: "bikes from garages, golf clubs from trunks of cars." He noted that some higher-end bikes "exceed the value of scheduled jewelry. It's not something that carriers typically think of as an opportunity for separately insuring and scheduling and making more premium dollars, but it is."
Enservio is a privately held firm that examines, in the most granular detail, what constitutes the true value of a contents loss. The 300-person company, based in Needham, Mass., has been crunching loss data for insurers since its founding seven years ago. McNeill said its business mix currently is 90% residential and 10% commercial.
Enservio's mission is the creation of contents inventories, putting actual market costs on individual items and then creating software solutions that match loss items with their appraised worth.
"We've been very explicit, in terms of defining our business, to stay in the contents business," said Robert Chase, senior vice president. "We've got about 2,000 categories and subcategories" and the company is adding thousands of new line item descriptions every week.
Enservio found contents claims was an "underserved" segment of the insurance industry, because insurers typically were letting their insureds write up contents lists after significant losses, Chase said.
"Until you've had one, you don't know how daunting a task that is," he said. "So the insurance carriers used to leave that to the insureds. They realized that was a recipe for additional disaster because the insured would get frustrated and start making things up or enhancing the quality of the things that they lost, because they felt like ‘I'm going to forget some things and therefore I'm going to make up for it by adding something.'"
Enservio sends in trained field inventory specialists who "prompt people through a process to remember what they had and especially to be truthful and comprehensive" in their claims. If there are public and independent adjusters' descriptions, they're also included. Then, using proprietary software, Enservio develops a list of everything that was most likely lost, based on "like, kind and quality."
"If somebody says they had a Chesterfield dresser, we're going to find a Chesterfield dresser" to satisfy the carrier's indemnification rules. "We're doing that on every line and presenting that to the adjusters and the insured--a comprehensive document that says ‘Here's what you had, here's what it would cost if you went out in today's marketplace and replaced it.' So we take the arbitrary nature of settlements out of the mix and do it in a fair way," Chase said.
Enservio's Contents Claims Index began as a challenge: "Can we create one number, one that's really easy to understand" by looking at various "baskets" of claimed items, and watch how they trend over time, McNeil recalled. "Let's run that basket of goods through every quarter and attach a number to that basket."
Enservio processes high-value contents claims through its Select division, which works closely with insurers such as Chubb, Chartis' Private Client Group, Fireman's Fund and others that insure high-net-worth individuals. "It's a specialty area of the business that really can't be served through the same mechanisms that we use for Main Street items that you might be buying at Target, Macy's or the stores that most people shop at," Chase said. Often, the items in high-value homes are relatively difficult to replace, he said. "Some of them are one-of-a-kind pieces of art, so we have people on staff who have masters degrees in fine arts. We have a lot of interior decorators."
Interesting and even quirky trends emerged from the 2010 data, Halpern said. Example: cassette tapes comprise 2.8% of "Movies and Music" claims. "I personally can't think of the last time I even saw a cassette tape," he said.
But from an insurer's point of view, "it's a collection of music, a collection of albums," he said, so insurers compensate its value "to allow you to replace that music," most likely as compact discs. "I imagine that at some point in the future it may just turn out to be Apple iTunes downloads."
Dennis Gorski, Best's Review managing editor, Dennis.Gorski@ambest.com
