Could a lack of diversity and access be worsening America's flood insurance gap?

Carrier's partnership with industry group aims to address a trust disparity

Could a lack of diversity and access be worsening America's flood insurance gap?

Catastrophe & Flood

By Gia Snape

A lack of diversity in the insurance industry and poor access to products and services are contributing to a widening flood insurance gap in the United States, especially among low-income and minority groups that are disproportionately at risk during extreme weather events.

To help address this gap, Selective Insurance teamed up with the National African American Insurance Association (NAAIA) to give affiliated independent insurance agents access to write flood coverage.

As NAAIA’s newly endorsed flood insurance carrier, Selective will serve and support NAAIA agents and their customers by providing access to flood experts who can help navigate the National Flood Insurance Program (NFIP) and claims service after a flooding event.

Bringing diversity, equity and inclusion to flood insurance

The pilot, launched earlier this year, expands the existing partnership between Selective and NAAIA. Ten agencies were initially brought into the flood program.

Omari Aarons (pictured on the left), executive director and chief operating officer of NAAIA, spoke to Insurance Business about the significance of this initiative. He noted the country’s long history of communities of color being disenfranchised from the insurance industry.

“One of the things that we talk about frequently within NAAIA is the lack of relational trust between communities of color and insurance and financial services,” said Aarons. “I would say it is a primary driver of the underinsurance gap as well.

What’s fueling distrust of insurance in communities of color?

Aarons is keenly aware of the ongoing distrust his community has for insurance companies and professionals. His grandmother, a stay-at-home mom with five children, had shared stories of feeling taken advantage of by door-to-door insurance salesmen.

“Now that I've been in the industry a while, she's gotten to see a different side of it,” Aarons said.

Negative interactions such as these often taint people’s impressions and, in turn, knowledge of insurance. NAAIA wants more of its independent agents who are deeply ingrained and connected in their communities to be able to “tell the story about the new way that insurance is functioning,” he added.

“We have great partners and great companies that are committed to being inclusive and equitable in the products and services that they offer,” said Aarons.

For NAIAA, the partnership with Selective is also part of its wider mission to educate the African American communities about the importance of insurance, especially for safeguarding assets against the growing risk of natural catastrophes.

Only about 4% of homeowners nationwide have flood insurance, according to the Insurance Information Institute, even though 90% of US catastrophes involve flooding.

A 2021 analysis by risQ, a Boston-based provider of climate-change analytics, also showed that non-white populations are disproportionately less likely to be covered by the FEMA Special Flood Hazard Assessment (SFHA) 100-year flood zones that are also used to determine residential flood insurance requirements for government-backed home loans.

“In addition to helping people in the black community see insurance as a career of choice, NAIAA has expanded its mission to help the black community understand insurance products and services, how to protect their assets, such as their home and other properties, that are important for generational wealth and closing the racial wealth gap,” Aarons continued.

Carriers’ role in improving diversity and closing the flood insurance gap

For Cassie Masone (pictured on the right), vice president of Selective’s flood insurance unit, the partnership with NAAIA represents a cause that’s “near and dear” to the carrier.

“NAAIA and Selective have looked to grow their partnership, and flood became a great avenue to create product offerings to NAAIA agencies. This is an area that's near and dear to Selective’s heart,” she told Insurance Business.

“The key here is to protect individuals from flooding, and a lot of individuals happen to be in underserved areas from an NFIP perspective. Our goal is to get flood insurance out to every individual, but it’s also about making the connections in those communities, and so the NAAIA partnership was critical.”

Many Selective’s employees are also NAAIA members, so being able to support their agencies is a bonus for the carrier. Masone expressed confidence in plans to expand the program to more agencies after the initial rollout.

“Selective will provide the handholding that these agencies need to sell flood insurance, which is a difficult product to sell,” she said. “A lot of people don't want it or don't feel that they need flood insurance. So, it’s important that agents have the support and the knowledge to sell flood insurance.

“What we’ll do for these 10 agencies in these individual chapters is provide that one-on-one support, get them trained up and arm them with marketing opportunities or ideas on how to touch people in their areas to get them to purchase flood insurance.”

Aarons stressed the importance of constant communication to ensure the success of the program, and ultimately, of the agencies.

“In partnership meetings, we talk about how agents are performing and the feedback we're hearing. Cassie and her team are hearing directly from the agents as well,” he said.

“Together we'll strategize ways to overcome and navigate any obstacles that surface as part of the program. We’ve been very intentional about the support that's being provided.”

What are your thoughts on Selective Insurance and NAAIA’s partnership, and the flood insurance gap? Share them below.

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