“How do you get people to buy a product that they don’t want, but they truly need?” That’s the question written on the post-it note that is stuck on to Jim Albert’s computer screen. The product he’s talking about is flood insurance.
Jim Albert is a well-known name in US flood insurance circles. He’s the chairman and co-founder of Neptune, a technology-enabled private flood insurance solution for both residential and small commercial risks. Before that, he was chief information officer at Bankers Insurance, based in Florida, where he led the technology and data analytics team, and he managed and upgraded the insurer’s technical platform, supporting the Write Your Own flood product via the NFIP, as well as a proof-of-concept private flood program.
Albert co-founded Neptune in 2016 with the aim of changing the way Americans buy flood insurance, and using data analytics and technology to make the product much more accessible. The firm wrote its first policy in early 2018, and, since then, it has expanded into 43 states and has nearly 50,000 policies across both residential and commercial flood.
While Neptune has enjoyed some early success, Albert fully acknowledges the challenges that inundate the flood insurance market. In a panel discussion entitled ‘Realtors - The New Flood Insurance Experts? How do we increase flood insurance coverage?’ in the FAIR Foundation Virtual Conference Series, Albert said getting insurance agents to sell flood insurance in non-mandatory zones, and getting people to buy a product that they simply don’t want, are two of the core challenges that the market faces today.
“Part of the answer is to make flood insurance super easy and inexpensive,” he said. “[Buying flood insurance through] Neptune is a two-minute process. You enter an address, and within two minutes, you’ve got your quote, you can bind your policy, the coverage can be effective immediately, you can e-sign, you can e-pay, and so on. That ease of use, coupled with the information the policyholders need to make their decision and the ability to see the premium very quickly – it all brings a pretty high conversion rate.
“That said, we still have a big coverage gap in the United States. So, there are a couple of other things that I stress [to insurance agents and prospective buyers]. One is that [the price of flood insurance is] often less than $1 a day, and when you think that the average loss in flood insurance these days is about $50,000, that’s a pretty good value equation. The other one is the stat you can see on the FEMA website, and a lot of other places, which is that one inch of water equates to a $25,000 loss or more in your home. That makes it very visual for agents and consumers in making their decision.”
One way to address the coverage gap would be to make flood insurance a mandatory purchase for all Americans by law. As someone who has worked very closely with national and regional policymakers to try to address the issues surrounding flood insurance, Albert said there’s no desire for such extreme policy at this point in time. However, he did stress that the coverage gap is “clearly a huge problem.” Even in mandatory flood insurance zones – those properties in the FEMA-designated Special Flood Hazard Areas (SFHA) – there are far too many people without flood insurance.
“My personal opinion is that there really needs to be a broader mandate,” Albert commented. “We look at the example of an AE zone [high risk] on one side of the street and the X zone [lower risk] on the other side of the street; the risk doesn’t drop off a cliff as you walk across the street. There’s still significant risk on the boundary zones of the X500s and those close to where the water flows. So, I’d absolutely be in support of some kind of broader mandate, but [changing the FEMA flood zones] is such a political hot potato.”