Opportunities in private market solutions
Photo by designer491/Shutterstock
In the wake of bigger and wetter storms, the personal property insurance market is beginning to realize the importance of offering viable private flood market solutions as an alternative and complement to federal flood insurance. A new report out by Verisk is revealing the true need – and opportunity – that exists in the marketplace. It shows 62 million residential homes in the U.S. at risk of moderate to extreme flooding with a premium potential of almost $42 billion for owner-occupied residences.
The Verisk analysis, Sizing the Personal Flood Insurance Market, estimates that reviving the private flood insurance market could generate $41.6 billion in written premiums for insurers from owner-occupied homes in the 48 contiguous states.
“The need for flood insurance far exceeds the current take-up rate,” said Marc Treacy, managing director of flood insurance at Verisk, in a release. “Our study shows just how many homeowners are at significant risk for flooding and how big the opportunity is for insurers looking to find a new avenue for growth.”
September 19, 2018 – Hurricane Florence flooding in Robeson County, NC. Courtesy FEMA
Over the past half century, personal flood insurance in the United States has been largely confined to the National Flood Insurance Program (NFIP). But as the NFIP faces growing financial strain in the wake of massive storms, the industry has come to understand the benefits of having a robust private market insure against the peril. We’ve proven that here in Florida, with the help of a welcoming regulatory environment. The number of private companies writing flood coverage in Florida has doubled in the past two years.
Through the National Council of Insurance Legislators (NCOIL), we’re attempting to create a private flood insurance model bill that other states can adopt to promote their own marketplace. We’re pleased to report that South Carolina is moving forward on its own to draft such a bill for consideration in its 2020 state legislative session.
Doing so, improves the availability and affordable of flood products. Here in Florida, there’s also continued efforts to create a more informed insurance consumer. The Federal Association for Insurance Reform (FAIR) has an effort underway, as noted in this Insurance Journal commentary, urging Florida lawmakers to implement consumer-centric public policy, such as required flood disclosure, that provides Floridians with confidence and protection in the home buying and renting process.
This latest research from Verisk, a worldwide data analytics provider, not only provides a true ground-up estimate of the premium potential but also showcases how insurance companies can pinpoint areas of opportunity and hazard at the state and county level.
LMA Newsletter of 8-26-19
