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Flood Insurance News of Note

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Private market growth, FEMA buyouts, and public perception woes

Miami Beach street flooding during 2013 King Tide. Courtesy: Steve Rothaus/Miami Herald

We’ve chronicled the rapid growth of private flood insurance coverage here in Florida and our efforts to export our model laws that encourage private competition to other states.  We have a digest of flood news this week, some good, some worrisome – especially on the public’s perception of catastrophe insurance (including whether they carry any).  It’s why agent education is so important.

The Insurance Journal carried a story on efforts by private carriers and MGAs to expand the market on their own through innovative measures, some of which started here in Florida.  A Munich Re executive, for example, says the number of property owners who’ve added flood as an endorsement to their homeowners policies has doubled in the past year.

Slow but steady growth is everywhere you look.  Private flood written premium in the U.S. grew from $376 million in 2016 to $644 million in 2018.  That exceeds the surplus lines market of $398 million. Here in Florida, our model laws have doubled the number of private insurance companies writing flood coverage here in the past two years.  They’re on track to writing 100,000 private policies by year-end.

The article carried my quote to the National Association of Insurance Commissioners’ Catastrophe Working Group: “This simple idea is designed not only to allow for consumer protections, but to simplify claims handling and perhaps rectify the wind vs flood debate, with one deductible and one adjuster for the property and flood insurance claim.”

Public Perception:  A new survey by The Simple Dollar found 55% of Americans believe climate change is increasing storms’ severity and frequency – yet 32% don’t think it will have any impact on their own home.

The personal finance website surveyed 2,700 Americans aged 18 and older to find out if they feel threatened by changing climate conditions and if they’re insured.  57% of people living in the South have home or rental insurance.  But overall, 15% of Americans do not insure their homes.

Perhaps most startling: nearly 1 in 3 surveyed under the age of 44 don’t even know if they have insurance!  That’s why I keep sounding the alarm and insisting model flood insurance laws include a requirement that agents educate the policyholder on homeowners and flood insurance being two different products and the differences between federal flood (NFIP) and private flood coverage.

FEMA Buyouts:  When it comes to the stated policy goal of not rebuilding repetitive flood loss properties, new data shows FEMA’s buyout program has been on a first-come, first-serve basis and likely skews toward more well to do populous coastal communities.

A study in the journal Science Advances, shows FEMA’s Hazard Mitigation Grant Program bought nearly 44,000 buildings from 1989 through 2017 among one-third of all U.S. counties over 49 states.  Of those, 3,780 were “complete buyouts” where the building was demolished and the land returned to being open space.  Buyout costs weren’t available.

FEMA doesn’t choose which buildings to purchase, but simply responds to state and local governments who submit applications.  Although Florida had the highest total property damage of any state at $98.8 billion, it was 24th in the number of homes purchased.  Louisiana at $85.4 billion in damage was 19th and Mississippi at $34.2 billion was 22nd in number of buyouts.

LMA Newsletter of 11-4-19

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Tags: FEMA Buyouts, Flood Insurance, Flood Insurance Survey

“Another great Newsletter on Florida industry this week.  Your service and advocacy in Florida is very important to keeping me updated and apprised of the Florida insurance laws, trends and overall environment.  Something similar is very much needed in Louisiana, too.”

Jennifer Tedesco, Esq., Claims Director
Pharos Claims Services
Orlando, FL

“Lisa this is another great newsletter, and we appreciate the time and energy you put into these informative updates – you are on top of these topics!”

Mike Graham, CEO
Smart Vent Products, Floodproofing.com, & Risk Reduction Plus
Juno Beach, FL

“Thank you Lisa for staying on top of, as well as advocating, for Florida residents and legislative reform. Your newsletters are very informative and enjoy reading the points of view.”  

Shawna Miller, Sr. Claims Quality Assurance & Compliance Manager
Florida Peninsula Insurance Company
Jacksonville, FL

“Just wanted to say that I thoroughly love your newsletter. It’s is always informative and insightful to the ins and outs of our industry.  You are an inspiration and an important asset in the insurance world.  Keep up the great work!” 

Cynthia Scott, President
University Insurance Group
Davie, FL

“Just a quick note to let you know how much I have appreciated your newsletter over the years and the assistance they offer for those in the field of claims. We depend on the information more than you will ever know!”

Laurie Rasberry, Chief Claims Officer
Acorn Claims
Prosper, Texas

“I have followed your weekly newsletter and podcasts and now have a full appreciation for what you bring to this industry.  You are an inspiring force, plain and simple.  I wanted you to know that you make a difference.  Thank you for all you do!”

Jeffrey Karam, CPCU
Bradenton, FL

“Lisa Miller is a true champion for the insurance industry, with her regular updates! We appreciate all you do and keeping us up to date on priority issues!”

Gillian Lloyd, Account Executive
Zywave
Milwaukee, WI

“Great article on Risk Rating 2.0!”

Austin Perez, Senior Policy Representative for Federal Housing, Valuation, Insurance and Commercial Issues
National Association of Realtors
Washington, D.C.

“Your newsletter is fabulous!  I greatly appreciate the topics you expose, so that insurance professionals like myself can keep up with the latest events that affect the public we serve and ourselves.”

Cynthia Hoehn, Independent Property & Casualty Personal Lines insurance agent
Clermont, FL

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