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Insurance Business | 09 Apr 2018, 02:49 AM Agree 0
Decision could transfer risk away from the embattled flood insurance program, potentially lowering costs for all
  • | 09 Apr 2018, 10:31 AM Agree 0
    What if each insurance company had to pay a fee to them each year or something like that? I think that would be easier than figuring out their own programs??
  • Robert | 09 Apr 2018, 10:34 AM Agree 0
    Why not have those "Write your own" Insurance companies, currently placing Flood business with FEMA, have a simple Property endorsement allowing the Homeowners policy to cover Flood? One policy for everything. Insurer's may balk but the consumer would benefit by having lower costs.
  • Eagle Insurance/Consulting | 09 Apr 2018, 10:44 AM Agree 0
    If the Flood Insurance is taken away from the Government it then can be placed in the free market and with so many insurance companies out there, it should reduce the rates people are paying now. Especially if it is opened up as an endorsement to Homeowners Policies and to Commercial Property accounts as an easy add on so the companies can collect more Premiums and spread the risk even more. At present the spreading of risk is only with those that are expected to have an occurrence. If you spread it over the others that should not encounter an occurrence or have a really reduced exposure this will lower the premiums for the consumer.
  • Kevin S | 09 Apr 2018, 11:38 AM Agree 0
    The problem with privatization is that this leads to an adverse selection problem where private companies cherry pick the good policies/risks and leave the high risk policies in the government program. This may lower rates for good risks, but hurts rates for the high risks, thus defeating the concept of insurance that is to spread the risk. The flood program already suffers from a major adverse selection problem, privatization will only make it worse. We have to figure a way to increase the sale of flood insurance to low risk properties. Too many people rely on FEMA handing out grants and loans after flood events and don't buy insurance to protect themselves.
  • Rich L | 09 Apr 2018, 12:49 PM Agree 0
    Flood rates will go up for those closest to the water, but actually decrease for the majority of homeowners whose risk is less. There will be competition for these accounts which will keep their rates low. But those closest to the water will continue to buy from the NFIP albeit at a slightly higher rate because they will become the market of last resort. Similar to a state's assigned risk pool, the insurers of the better flood risks should be required to pay into an assigned risk pool to offset the coastal risks still covered by the NFIP. That said, the NFIP has cost U.S. Taxpayers over $50 billion (including a $16 billion write-off last year. Will we ever get our money back?
  • Sam | 09 Apr 2018, 01:50 PM Agree 0
    Past experience with flood no coverage for swimming pools and some out buildings created consumer issues. If flood endorsement could be added to Home Owners policy to cover these would help this matter.
  • C Kelly - Louisiana | 09 Apr 2018, 05:50 PM Agree 0
    The problem as I see it is there is no data on how the private companies will handle a claim. Will they cancel the insured after a claim like what happens with hazard insurance or will the premiums to so expensive the insured will be unable to pay the premium?? If it is not government backed then it is possible there will be a huge increase of loan defaults especially in coastal areas. This will have a negative impact on taxes, lenders, realtors etc. As we know the climate is changing whether man made or the course of a living planet. The earth has and will always have weather patterns in cycles. What might work is a "Catastrophe" insurance whereby it covers flooding, fires, landslides etc that the government may have to back anyway. That way there will be a larger pool and input for the funds. The other question is I would be interested in seeing how the 30 billion was paid? There were claims that were paid for Katrina from large carriers that should not have been paid and now FEMA is handling the servicing for the carriers. In other words WASTE which adds to the deficit and it just depends on how much and it should be audited. I think there should be a lot more discussion before FEMA turns insurance to the private sector on its own. Too many considerations.
  • zz | 09 Apr 2018, 05:55 PM Agree 0
    A previous poster wrote... "If the Flood Insurance is taken away from the Government it then can be placed in the free market and with so many insurance companies out there, it should reduce the rates people are paying now."

    Gov't flood insurance is essentially subsidized for everyone living in a flood hazard area. There is no way someone at high risk for flooding will get a cheaper rate from private industry, who will price based on perceived risk. The only way out of this mess is to get more people from non-flood prone properties to sign up for flood insurance to offset the high risk ones.
  • | 09 Apr 2018, 09:16 PM Agree 0
    Just like health insurance. That went down after..... oops....
  • | 10 Apr 2018, 08:10 AM Agree 0
    Health insurance is a good analogy. Both health and flood claims cost so much that premiums have to be high, either good insureds subsidize bad or higher risks pay exorbitant amounts. There is a pie that has to be paid for with premiums and that pie includes claims paid expenses some profit. If the cost of these three things adds up to a lot then premiums have to be commensurate. The government has kept premiums surpressed artificially and they’re $30B in the hole. Slice the pie anyway you want but there’s no magic answer that provides broad coverage at cheap rates for those that live near water UNLESS the program is subsidized by the taxpayers. And that’s certainly not fair.
  • LJ | 10 Apr 2018, 11:06 AM Agree 0
    It is already available to those who don't/won't have the need for it, and they already do not purchase it. And THAT is why the rates are so high for flood coverage. It would have to be a mandatory, already included coverage, not an endorsement to be purchased, for the premiums to be sufficient enough to pay such enormous claims. FEMA is the perfect example, it is why they are "in the red". Same goes for the "Obamacare", the healthy individuals are still not purchasing health insurance, as the penalties for not purchasing coverage are much lower than the cost to purchase the coverage. WHEN the healthy individuals are penalized high enough, then and only then will they purchase the coverage which will bring the law of large numbers into play, and the premiums then start reducing. Even my boss says it would be cheaper for him to pay the penalties than to pay for the health insurance for his employees, but he pays for it as we are in the insurance industry, and it is the right thing to do.
  • Prill | 11 Apr 2018, 11:42 AM Agree 0
    Great,
    Consumers need to be educated what a flood is first. It's not just coastal...
    Explain risk and benefits ..clearly

    Flood definition:
    National Flood Insurance Program has established a legal definition for a flood as follows: A flood is a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow. Anywhere it rains it can flood.

  • Phillip@coverageadvocate.com | 17 Apr 2018, 12:34 AM Agree 0
    The idea of making flood coverage an endorsement on a clients homeowners policy or even paying the NFIP an annual fee to use its platform is not a quality solution for private carriers.
    The real reason the NFIP is in such DEEP DEBT is because they use extremely outdate maps (FIRM) to rate their risks.
    Properly rating risk is crucial to being a sustainable pillar in the insurance market and the NFIP just doesn't have the proper resources to redo their mapping each year to properly rate the risk(s) they have taken on.
    Private carriers (WYO) will need to have their own unique rating and underwriting standards to be profitable. If they use the same approach as the NFIP they will end up in the same situation and us tax payers will end up bailing out insurance companies instead of the government.

    Update ratings and collect proper premium.
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