Private Flood Insurance Growth Creates Opportunities For Claims Professionals
Private Flood Insurance Growth Creates Opportunities For Claims Professionals
A nudge into the market by carriers offering private flood insurance is becoming more of a shove. This might bring new opportunities for claims adjusters. Also, it may create a more efficient claims process along the way.
There are many property owners who choose to add their white-label flood risk endorsement to their insurance policies. Also, this number has doubled in the past year. This information comes from an executive for Munich Re.
The chief executive officer of Poulton Associates said his firm will launch a new program. Poulton Associates is a managing general agent. Poulton sells private alternatives to the National Flood Insurance Program. This program allows agents to quote the cost for more flood coverage for every policy in their book of business.
These developments come after an increase in the premiums collected for private flood insurance. The National Association of Insurance Commissioners started tracking this as a separate data point in 2016. NAIC data shows that insurers reported a direct written premium of $644 million in 2018. This is up from $376 million in 2016.
Those figures don’t include flood insurance written as a surplus line. The Wholesale Specialty & Insurance Association estimated this to be $398 million in 2017. This is according to a report by Carrier Management.
The $1 billion in written premium for private flood insurance compares to $2.85 billion in direct premium for federal flood insurance. This came from a report to NAIC in 2018.
Florida
Florida removed one hurdle for private flood insurance. They did this by adopting rules. These rules create a process for carriers to certify that their coverage is equal to policies sold in the federal program. These meet lender requirements. New federal rules that took effect on July 1 will remove another hurdle nationwide. This is by requiring lenders to accept private flood insurance. Insurance deemed equal to insurance sold under the federal program.
Data from Florida accounts for 35% of the federal flood insurance policies in the states. This shows that sales of private flood insurance have been rising quickly. The number of personal residential private flood insurance policies increased by 42% in six months. Also, they increased to 62,933 polices on March 31 from 44,252 on Sept. 1, 2018. This is according to the state Office of Insurance Regulation.
Momentum
Craig Poulton said public awareness has risen by events such as Hurricane Harvey. Craig Poulton is CEO of Poulton Associates. There was an estimated 70% of losses were not covered by insurance. A 2016 flood in Louisiana that wasn’t associated with any named storm. Insurance brokers are recognizing that flood insurance isn’t a stand-alone product. They are starting to understand that there is demand for the coverage.
“I think it’s just a momentum thing,” Poulton said. “There’s this domino effect. The product is available and it will help you sell policies. The early adopters start preaching that. Pretty soon the guy across the street learns that he better do the same thing.”
That momentum prompted Poulton’s company to work with an insurance partner. They designed a software program that provides flood insurance quotes. The quotes are for entire books of business. Poulton said the following in testing. His company and its tech partner were able to quote flood insurance for a book of business. It had more than 100,000 personal lines policies. The program hooks up through an application program interface (API) with IVANS. This is a proprietary system used to exchange information between insurance carriers and agents.
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