WHAT DOES HOMEOWNERS INSURANCE HAVE TO DO WITH TREES?

By Matthew Gauldin, Dr. Jason Gordon, and Dr. Beau Brodbeck

The Issue

Increasingly intense and severe weather worldwide has created challenges, not only for green industry professionals, but also the insurance industry. Insurance carriers are seeing record losses due to natural disasters like hurricanes and wildfires. To address growing risks, insurers have been creating more stringent underwriting requirements and pulling out of regions experiencing frequent disasters.

The changing underwriting requirements have brought yard trees under a microscope. Insurance companies have required policy holders to prune or, sometimes, completely remove trees. These companies increasingly use drone or aerial imagery to identify and determine mitigation measures for tree risk.

They typically do not apply protocols and standards of risk assessment accepted by the tree care industry. They often do not consider tree condition, species, or site characteristics that compose the foundation of a wellinformed tree risk assessment. Because of their widespread influence on homeowners’ decisions regarding trees, the insurance industry could negatively impact urban forest canopy, associated ecosystem services and the general livability of many communities.

To address this issue, our research aimed to explore if the insurance industry is affecting the urban canopy and how its approach to tree risk impacts homeowners and arborists. Our findings could lead to identifying strategies for the insurance and arboriculture industries to build bridges and improve relationships.

For our research we interviewed insurance agents and arborists in coastal communities from North Carolina to Louisiana. Thirty-seven insurance agents participated and were either independent agents, acting as brokers, or captive agents, who wrote policies for one carrier. We also spoke with 33 arborists, 31 of which were ISA Certified Arborists.

Tough Climate for Homeowners

Many agents described underwriting requirements becoming more stringent and harder to understand as weather-related risks have increased. One agent said, “[In the last] 10 to 15 years it’s got progressively harder… and it’s predominantly... in the coastal zones.” In the past, a carrier may not have addressed a branch touching the roof. Now many will not allow any visible limbs above the home. Independent agents and their clients have limited insurance options. An agent described the situation: “We have maybe four compa- nies that are actually writing, and only one that’s extremely competitive.” Homeowners along the coast are left with little choice but to comply with insurance requests if they want coverage.

The Final Decision

Insurance agents often act as the public face of the carriers, but their decisions can be overruled by the underwriter: Even when agents have knowledge of localized and specific risks, the underwriting department makes the final decision on coverage. One agent described their lack of decisionmaking power: “…We’re not gonna change [the underwriter’s] mind if I say it’s a live oak and it’s in great condition and it’ll never touch that roof…” Several agents were frustrated by this dynamic but were unsure of how to change it.

Numbers Talk

Many of the agents we spoke with shared a desire to develop better relationships with the arboriculture industry but were unsure where to start as the final decision belongs to underwriters. They believed underwriters need financial figures demonstrating net cost savings of employing arboricultural practices to reduce tree risk. One agent said, “If you approach it with their [insurance executives’] pocketbook, they start listening.”

The Takeaway

Most homeowners are unaware of the potential risks trees pose to their property and unfamiliar with arborists and the role they play in assessing tree risk. Educating homeowners on their options aside from whole tree removal or overpruning will be crucial to conserving the urban canopy. Fortunately, many arborists noted that their risk assessment letters were frequently accepted by insurance carriers, and that crown reduction pruning was often enough to satisfy the underwriters.

Beyond educating homeowners about their options, connecting with underwriting departments of major insurance carriers will be an important next step to bridging gaps and building relationships between the arboriculture and insurance industries. An important step is providing insurers with data demonstrating the key financial benefits of trees, such as wind buffering, stormwater and erosion mitigation, and energy savings. But this must be followed up with profitdriven economic considerations that satisfy shareholders. While following arboricultural standard practices reduces the risk of damage trees pose to property, the qualitative nature of the tree risk assessment may be difficult for underwriting departments to accept or quantify from a cost-benefit perspective.

Ultimately, there also needs to be greater public awareness of how insurance companies may be affecting the urban tree canopy, and therefore community wellbeing, using unqualified methods of tree risk assessment. Increased awareness and knowledge will lead to policy and management actions. The key to effectuating change related to trees and tree risk is getting the right people in these two seemingly diametrical industries to communicate. n

This research was funded by the United States Department of Agriculture – National Institute of Food and Agriculture.

ABOUT THE AUTHOR

Matthew Gauldin

Master of Landscape Architecture & M.S. Forestry and Natural Resources Candidate University of Georgia gauldinmatthew@gmail.com