ADJUSTERSINTERNATIONAL.COM 5 Adjusters, of course, are the messengers delivering the bad news concerning these coverage limitations to the insured. Though adjusters typically strive to avoid adversarial relationships, it will be a challenge when these endorsements are in use. Conclusion Since these endorsements have only recently been filed with state insurance departments, it is not yet certain what their impact will be on the insurance environment. Although it is possible that the endorsements could become the norm rather than merely an option, it is also quite possible that not all state insurance departments will approve them or that all insurers will adopt them. Depending on agent and consumer response, insurers may decide to modify their endorsement language or offer premium discounts in the interest of public relations. Some insurance practitioners have suggested alternative ways to improve insurer loss ratios in lieu of these endorsements, e.g., increase deductibles on roof damage caused by wind or hail, or offer two rating plans — one with the cosmetic damage exclusion and one without. ____________________ 1A cosmetic damage exclusion was previously available in Texas, where hailstorms are frequent and often severe. What is noteworthy is that now ISO and AAIS have introduced similar endorsements to be used by their member companies. 2Will Wind/Hail Cosmetic Damage Exclusion Endorsements Become the Norm? By Amy O’Connor, March 7, 2013, Insurance Journal. 3Cosmetic Damage Exclusion Endorsement and Roof Surfacing Amendment Endorsements Approved. American Association of Insurance Services (AAIS), Reference Bulletin 13-0242, 10/04/2013. Time will tell how far the industry will go with these endorsements, how they will be received by state regulators, how they ultimately will be accepted by insureds and agents, and how the cosmetic damage exclusion may be interpreted by the courts. The reality is that insurers have a responsibility to monitor their loss ratios and respond accordingly when they believe they need to be improved to preserve the bottom line. Raising premiums, reducing coverage, increasing deductibles and offering different rate structures are some of the options insurers have. As for the endorsements, consumer and agent response likely will influence how broadly they will be applied. Agents and insured need to be aware of and understand the limitations if these endorsements are attached to their policies.
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