Flood Risk Solutions places primary and excess flood insurance programs
on behalf of select insurance partners across the United States
More flood options than any other technology platform
Show your clients that you’re a flood expert
- ONLINE PORTAL – QUOTE IT YOURSELF (not all risks are eligible online)
- AM Best A Paper including Coastal Geographies
- $25M Limit (Commercial and Residential) + Excess Available
- TIV’s of up to $5B considered
- Business Income Coverage Available as well as Content Coverage
- Ability to write in critical flood zones
- Replacement Cost Endorsement
- Coverage equal or greater to the baseline NFIP policy
To initiate a quotation:
Login in to quote online or email submission to email@example.com
Why flood and why now?
The market for flood is a hot topic across the United States, for a variety of reasons, and will likely get even hotter, as time progresses. One such topic is what agent’s do with their client’s moving forward? Broker’s are torn between sticking with their familiar NFIP program’s that have been in existence and provided a backstop for their customer’s over the past 30 years, or look to the private market that has seen significant signs of development over the past few years.
Given the progression of flood modeling, big data, and technology improvements, there is been an uptick across the board from both admitted and non-admitted players in critical flood zones. As carriers are able to understand their PML’s and aggregation on a more granular level, this has helped produce actuarially sound rates and reinsurance capacity.
In coastal geographies such as Florida, there are a few carriers willing to write the coverage on their own paper on an admitted basis or partner with a London based solution and offer the coverage as an add-on to their existing multi-peril offering. The mono-line segment continues to grow as well, mainly through London syndicates and domestic E&S players.
For the agents who have already taken the leap of faith into the private market, so far, the response has been positive for both personal residential and commercial risks. The private product is offering higher limits greater than $250,000 for residential and $500,000 for commercial, alleviating an E&O exposure, and foregoing the need of an excess placement. Additionally, the coverage from a commercial perspective has been broader to include Business Income, and less onerous coinsurance provisions that come into play on commercial residential(condo’s/apartments), as well as lower deductibles.
There are agents who have resisted the private market and continue to support the NFIP program given the higher commission structure, while the product has proved a viable solution over time. Banks and lenders are also in the process of learning the market and have pushed back on some private solutions, if the coverage is not the same or greater to the NFIP program. This has resulted in many carrier’s form to be replicated on a Me Too basis of the NFIP product, to alleviate any issues with the financial institution, however will be supplemented by extensions and endorsements.
As the marketplace grows, there will be much debate over which solution is the best for your client’s, however the outcome will most likely be a hybrid result with the NFIP and private sector playing in various capacities and various geographies. As time goes on we will continue to provide updates on our take on the private and public markets and their cost and benefits for each.
What's the Latest on NFIP?
Since 2012 when Congress passed legislation aimed at saving FEMA’s insurance program from insolvency, (later limited by subsequent legislation) flood insurance premiums have indeed risen. Nationally in 2018, premiums went up by 8 percent overall.
Earlier this year, FEMA announced that it will be moving towards a new risk based rating system by October 1, 2020 and this September they have provided some additional information. https://www.fema.gov/nfiptransformation
As we have passed the 50 year anniversary of the National Flood Insurance Act of 1968, we looked into it’s costs, it’s benefits, and the future of the flood market inside the United States. The forecast deficit published by the Congressional Budget Office in September 2017, estimates a $1.4B annual shortfall for the NFIP program and emphasizes the well known fiscal dilemma the NFIP seems to confront annually. Over the past 5 years, there have been legislative attempts to reform the program.
The Biggert Waters Flood Insurance Act of 2012 was a step to bring actuarially sound rates to the program, and in some cases was delivering unanticipated and unaffordable rate increases to the general public, which led to the Homeowner Flood Insurance Affordability Act of 2014, which softened some of the 2012 changes. However the legislature decides to move forward into the future, the fact remains the total collected revenue amounts to $4.3B while expected costs are $5.7B on an annual basis. By any underwriting standard, the combined ratio is well over a sustainable metric. Of the $5.7B in costs, $3.7B constitutes actual flood losses while 1.3B is allocated to administrative expense and .7B is assigned to mapping costs, debt service, and mitigation assistance. The main question, is how do you bring actuarial sound rates to a program that has built, a housing, mortgage, and construction market on top of underpriced insurance product, without destroying underlying value, and provoking subsequent consumer distress? The solution will most likely revolve around a multi-faceted approach that involves all parties coming together with a collaborative strategy. There are a number of proposed idea’s that could lend to a stronger future, including broadening the overall base of flood consumers in flood zone X, increased new construction standards, further rate increases across the portfolio, increased utilization of big data and technology, private flood product growth, as well as strengthened flood mitigation techniques on existing construction. Given the sheer number of NFIP consumers, roughly 5.1M, the solution will most likely involve a compromise across all parties. Over time, the program can prove sustainable with all stakeholders contributing in a creative fashion.