As flooding risks continue to grow across the U.S. and beyond, finding the right Flood Insurance policy is essential for property owners. To learn more about Flood Insurance, we spoke with Brad Turner, Vice President, National Product Manager, Flood, Burns & Wilcox, Morehead City, North Carolina.
What are some of today’s greatest risks regarding Flood Insurance?
B.T.: The lack of awareness of exposure is the biggest risk with Flood right now. A lot of individuals, as well as lenders, look at proximity to water as being the predictor of their actual exposure. We see many, many individuals going through a lot of hardship because they have not purchased Flood Insurance based on those expectations. We currently see a lot of smaller tropical events dumping a ton of rain in places we have never seen before. The uptake of Flood Insurance in the U.S. is very, very small compared to the actual exposure.
What should property owners be aware of relative to these risks?
B.T.: Brokers who specialize in Flood Insurance can navigate the public and private Flood Insurance options available. Many property owners do not understand how flood coverage is placed and what resources are available to them. There are a lot of websites that can help you better evaluate your flooding risks compared to the traditional “flood zone” approach, which has not proven to be a great predictor of loss.
How does Flood Insurance help property owners respond to these threats?
B.T.: Flood Insurance is made to cover property that exists on normally dry land. Flood is a ground-up exposure and typically responds to events that are not isolated to a single property. Flood Insurance covers mud flow as well, which is important out West. The new FloodPlus program Burns & Wilcox offers has some options that are not available anywhere else in the market. FloodPlus is a digital product that is easy to quote, issue, and bind for a broker, as well as an example of a private market policy that greatly expands upon what previously existed. The product has a broader definition of a flood event and does not require that two or more properties or two or more acres are affected. FloodPlus does not have the same exclusions as other Flood policies, such as exclusions on elevated homes, basement personal property, and enclosures. If someone experiences a flood event while they are traveling and they lose personal contents, they could have that covered. Also, loss of use coverage is readily available, whether it be additional living expenses, rental income, or commercial business loss of use.
Can you offer an example of a scenario you have dealt with that would be illustrative of the types of risks we have been discussing?
B.T.: Sometimes there is a misunderstanding as to what Flood Insurance covers versus what other policies will include. Flood is excluded on most property policies such as Homeowners Insurance. We see so many claims declined on a wind and property basis because the incident was a flood event, and they do not have Flood Insurance in place. At that point, their only option is to submit for federal funding and take out a long-term loan, and often the loan amount FEMA offers is not sufficient to cover a catastrophic loss.
What are the greatest opportunities for brokers to get into Flood Insurance?
B.T.: We hear many times that brokers are not necessarily comfortable placing Flood coverage. The most important thing is partnering with someone who specializes in Flood, such as an E&S (Excess & Surplus) wholesaler with whom they have a trusted relationship. They will have a greater awareness of not only what risks are present but what options are available. I would recommend selecting Flood partners with access to risk modeling, as well as experience with the variety of flood forms that exist in the market and how they can interact. Specialists, such as those with Burns & Wilcox, are able to align expertise with these tools to give a deeper, richer insight into placement.
What advice would you give brokers increasing their success rates selling this coverage?
B.T.: A lot of brokers are only pursuing Flood coverage if it is required in an area, or they have a waiver signed if the client does not want the coverage. Because we are seeing so many uninsured losses where insurance was not required and coverage was not offered, we are seeing an Errors & Omissions risk for agents. The target audience should be everybody. It is important for brokers to connect the client’s risk to something tangible. If you take the data and look at the chances of a property flooding within the next 30 years, what is their potential for loss? What is the amount of flooding they could sustain within that time period? Brokers who have a lot of success offer Flood Insurance every time, and they tie it back to what the client is willing to spend versus what they are willing to retain risk-wise. They customize each of those solutions, every single time.
Why should someone consider Burns & Wilcox for their Flood Insurance needs?
B.T.: We have access to one of the most expansive portfolios of Flood products in the market. We also have that aligned with our Flood practice group, which is a centralized expertise of underwriters who deal with Flood every day and are very good at navigating the National Flood Insurance Program (NFIP) and all the private options and customizing coverage for what the client needs.
Flood Insurance
WHY YOUR CLIENTS MIGHT NEED IT: Climate change has increased the frequency and severity of flood events, including in areas that previously were at low or moderate risk for flooding.
PROTECTS AGAINST: There can be prohibitive costs associated with repairing or replacing a residence and its contents following a flood, which is not a covered peril under standard Homeowners Insurance policies.
EXPERT OPINION: “Brokers who have a lot of success offer Flood Insurance every time, and they tie it back to what the client is willing to spend versus what they are willing to retain risk-wise.”
