Flood risk captures the attention of the US public in waves. Six years ago, when Superstorm Sandy struck the east coast causing record storm surge and leaving more than $68 billion in damages, flood was absolutely a top of mind issue. Fast-forward five years through multiple politically charged National Flood Insurance Program (NFIP) extensions to Hurricane Harvey – a Category 4 storm remembered for dumping up to 60 inches of rain and triggering unprecedented flooding in Texas and once again, the issue of flood mitigation and risk transfer hit the headlines.
The insurance industry has had a tough time tackling flood risk in the past decade – but that’s turning around with the fast-emergence of the private flood market and the evolution of risk modeling technology that can paint a clearer picture of asset exposure. One firm to really embrace the potential of new technology is WKFC Underwriting Managers (WKFC), an MGU in the RSG Underwriting Managers (RSGUM) family that specializes in property risk and offers widespread access to the excess and surplus lines marketplace.
For WKFC, Superstorm Sandy was the real catalyst for change in the firm’s approach to flood risk. Dawn D’Onofrio, president and CEO of WKFC explained: “Superstorm Sandy really made us stop and re-think our flood strategy. At the time, we were relying on FEMA flood maps and we were probably a little bit more lenient on our flood risk underwriting selection criteria than we are today. Areas we thought might be non-critical flood zones actually turned out to have some risk in critical zones. We took losses in Sandy, some of which surprised us.
“I was WKFC chief underwriting officer when Sandy struck, so I was very much involved in every claim and every insurance scenario that played out. We learned a lot from that storm and by December 2012, we had already instituted much more stringent underwriting guidelines. Fast-forward to 2017 and we had no surprises during Hurricane Harvey.”
Technology has been a really powerful enabler for WKFC. D’Onofrio says the firm’s in-built risk modeling capabilities allow for more accurate and competitive underwriting as well as constant asset data monitoring, which is a huge value-add during a catastrophe event.
“We had access to live data throughout the catastrophic hurricane season last year,” D’Onofrio told Insurance Business. “We knew every point when the storms were changing and we were able to model them and work out our aggregate exposure. In the past year, we’ve become even better and more efficient with our technology and our modeling capabilities. During Hurricane Florence we were able to go through our book of business line by line and tell our carriers which accounts we thought would be affected. It’s very compelling for an insurance carrier to deal with an MGU partner that has access to real-time data and is using that to control their book.”
Using real-time data and state-of-the-art risk modeling technology is also helping WKFC better serve its broker partners, according to D’Onofrio. In the E&S property arena, brokers are “constantly asking for more robust coverage,” which challenges firms like WKFC to keep improving, she said.
Are you interested in learning more about flood risk? Join Insurance Business at the Flood Risk Summit in Miami on November 29 as leading experts discuss flood insurance issues.