Projections in a report issued by the University of South Carolina estimate insured losses due to Hurricane Michael could reach as high as $11 billion. When Hurricane Willa was heading towards Mexico, many homeowners in the U.S. started inquiring about flood insurance. With the continued threat of hurricanes and their number and severity on the increase, far too many Americans still lack adequate coverage for the risk.

Tim Brockett, who is the senior VP of strategic products reinsurance at Munich Re had this to say, ” Flood insurance is an optional purchase for the majority of US homeowners and business owners. While the flooding from recent events such as Hurricanes Florence and Harvey have been devastating, and 98% of the US counties have flooded in the past decade, the take-up rate for flood insurance remains unacceptably low.”

The education of the consumer, or lack there of, could be a large reason for why so little homeowners carry flood insurance. Currently, according to data provided by the Insurance Information Institute, the percentage of homeowners who have flood insurance stands at a mere 12%. If you think this is bad, according to a 2015 survey conducted by the III found that 24% of homeowners are under the mistaken impression that their homeowner’s insurance policy covers them for damage caused by a flood. A further 19% of those surveyed stated they had no idea if their current homeowner’s policy covered them for flood damage. As agents, it is our responsibility to get out there and educate the consumer.

In a report issued by Swiss Re, it was found that 80% of the homes damaged in Metro-Houston by Hurricane Harvey did not have proper coverage. It falls on agents and brokers to educate their clients on the need for flood insurance that will protect them in the event of a catastrophic event that causes heavy rains, a storm surge, and of course flooding.

The first step for an insurance agent or brokers is to talk to their clients about the potential for flooding in their area. They can then talk about the various insurance options available to provide adequate coverage. At the same time the risk changes with virtually every one-foot increase in elevation. When underwriting, a highly detailed description of the property’s location and elevation is required in order to accurately asses the risk.

With the National Flood Insurance Program straining under the current load of claims and lack of government funding, the private flood insurance market continues to step up to the plate and is working to meet the demands of the future. This is to be a subject of the upcoming Flood Risk Summit along with talks about the many changes that need to be made in the current NFIP.

A gradual transition over to a private/public partnership from the NFIP, but in the interim the NFIP needs to be strengthened should we be faced with more catastrophic events such as Hurricanes Harvey and Katrina or Superstorm Sandy. The recent inception of reinsurance is an essential step in building a stronger and more robust NFIP. At the same time, Congress needs to reauthorize the NFIP with a long-term mandate that eliminates any lapses in protection. This will help to keep the market more stable while the private sector works to put a program in place that will complement the plans offered under the NFIP. Brocket went on to say, ” There should also be a continued drive toward risk fair pricing in the NFIP. This could include the incorporation of private flood model output and mapping data in the rate-making process to better reflect extreme event potential and individual risk attributes in the underwriting process.”

Flow Insurance Services knows flood insurance, and we know it well. With over a dozen private flood carriers, you can place your trust in us and let us help you to write more business. When it comes to growing your business, things can be challenging. Embrace the opportunity of private flood insurance!