The National Flood Insurance Program (NFIP) is up for reauthorization in 2017 meaning the government-backed and privately delivered coverage needs a bill that passes both the House and the Senate for the program to continue.
It’s expected FEMA’s NFIP will get its reauthorization beyond the September 30 deadline, but the deeply indebted program is also anticipated to experience significant scrutiny and potential reform.
Many private insurers offering policies outside of the NFIP have popped up as a result of perceived gaps in the coverage offered by FEMA.
As such, it has become incumbent on brokers to stay abreast of the changing options in the flood insurance marketplace argued John Dickson, President of National Flood Services (NFS) Edge Insurance Agency.
“Needs have evolved over time and I’m not sure the NFIP has kept pace for every need for every home and the private market is stepping in to do that today,” Dickson said. “So everyday there are different options, different coverages, different products that help homeowners.”
Dickson believes the NFIP’s director Roy Wright is right to pursue risk analysis based on individual homes rather than solely on flood zones.
Some private flood insurers already offer more customizable policies with rates geared to the homeowner instead of just a region.
The uninsured fallout from Baton Rouge’s mass flooding in August highlights the urgent demand for re-examining how mandatory and non-mandatory flood zones affect survivors.
“North of 83% of the homes that were severely damaged by that event (in Baton Rouge) the homeowners weren’t insured for flood. It’s a travesty,” Dickson said. “It leaves many people severely impacted when a flood insurance policy would get them back on their feet again.”
Dickson listed flooding events in Houston, Baton Rouge and West Virginia as causes for what he called an “elevated” year in claims volume from flooding.
He outlined that the NFIP and many private flood insurers only cover residential buildings and the FEMA backed plan doesn’t payout more than $250,000, doesn’t offer additional living expenses options or give policyholders the ability to customize their coverage while some independently offered policies do.
“If a homeowner can’t get the answer from an agent to the question ‘What options do I have?’ they should get a new agent,” Dickson said.
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