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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


HIGHLIGHTS

 * 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 quote@floodsol.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.

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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

“FEMA is focused on building a culture of preparedness by closing the insurance
gap. Recognizing that purchasing flood insurance can be confusing and
time-consuming, the National Flood Insurance Program (NFIP) is redesigning its
risk rating plan to improve the policyholder experience. We are committed to a
NFIP that people value and trust; that is fair, understandable, and less complex
to navigate.

Risk Rating 2.0 aims to accomplish this by leveraging industry best practices
and current technology to deliver rates that are fair, easy to understand, and
better reflect a property’s unique flood risk.

Risk Rating 2.0 will fundamentally change the way FEMA rates a property’s flood
risk and prices insurance. The current rating methodology has not changed since
the 1970s. But since then, technology has evolved and so has FEMA’s
understanding of flood risk. Currently, FEMA develops rates based predominantly
on Flood Insurance Rate Map zone and Base Flood Elevation. With Risk Rating 2.0,
FEMA is pairing state-of-the-art industry technology with the NFIP’s mapping
data to establish a more comprehensive understanding of risk at both the
community and individual level.”

FEMA also provide a brochure and some FAQ’s, which can be found in the links
below.

https://www.fema.gov/media-library-data/1569002542461-a458061bb06a2d7cf6dbdf83bbd8d763/RiskRatingOverview_May2019_to_Sept2019.pdf

https://www.fema.gov/media-library-data/1569002865535-3788fed9dc74556f98a3afe587799170/RevisedRiskRatingFAQs_May2019_to_Sept2019.pdf



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.

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CONTACT US

 * Flood Risk Solutions, Inc. 360 Central Avenue, Suite 1260,St. Petersburg, FL
   33701

 * Toll Free (833) US-Flood [833-873-5663], Office (813) 336-8226

 * info@floodsol.com

 * www.floodsol.com

© 2021 by Flood Risk Solutions, Inc