Educating Florida insurers on flood: National Flood Services
Hurricane Ian represented another and timely wakeup call to consumers and carriers on the importance of flood insurance—but more carriers are realising its importance and potential and moving to offer it and raise awareness in the aftermath of the storm.
That is the perspective of Lindsey Erickson, chief executive, and Thomas Garner, chief operating officer, of National Flood Services (NFS), owned by Taurus Flood. They note that one consequence of the hurricane was that it again exposed just how low flood insurance penetration rates are in some areas—and even homeowners with insurance discovered they were underinsured given the increase in property values in recent years.
Hurricane Ian made landfall in September 2022 on the west coast of Florida near Fort Myers Beach, as a category 4 storm. In Florida alone, almost one million first-party property claims were reported. In addition to delivering strong winds, the storm slammed Florida with a catastrophic storm surge, causing widespread flooding.
“In the aftermath of that event, many homeowners discovered they did not have flood insurance, or they were underinsured,” Garner told Intelligent Insurer.
“Property values have increased, and limits were often too low. Hurricane Ian was a timely reminder on some of the challenges around flood—but it has acted as a catalyst for change.”
Erickson said that one of the keys to solving this problem is educating carriers so that they offer flood insurance as a matter of course—in addition to property policies. She stresses that the technology is there to do this easily—and offering it under the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA), means there is no risk to carriers.
“It is a question of education—but more carriers are moving into this space,” she said. “We have seen two new carriers starting to offer this already this year and we expect more to follow. The real shame is that carriers with big property books in states such as Florida are simply not offering it to customers.”
The business case
Garner added that there is a compelling business case for doing this. “Flood using the NFIP is risk-free to the carrier; it is another revenue pipeline and they don’t have to worry about losses. The technology is there to get up and running very easily. It also makes it easier to retain customers since they won’t be shopping around for a separate flood policy.
“When a claim comes in it is so much easier if the property and flood policies are with the same carrier—it reduces disputes and litigation,” he explained.
Erickson reiterated that education is key—but whereas the focus has historically been on consumers and agents, they are now targeting carriers too. She stresses that the NFIP’s Write Your Own Program, which allows participating insurers to write and service a standard flood insurance policy in their own names, is very easy to start on. “The issue is that many carriers don’t understand it,” she said.
NFS was founded in Chicago in 1985 to serve the newly created Write Your Own Program offering government-backed insurance for the nation to protect itself from flooding. It was acquired by Taurus this year, which is now investing in new technology and services around flood products.
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