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John O’Marra
Senior vice president, property
RT Specialty
“Flood market conditions are hindering the expansion of private flood insurance. Commercial insureds see flood as more of a luxury than a necessity and don’t purchase coverage. The client might not understand their exposure, and the price of coverage is viewed as prohibitive. With limited demand, not many commercial insurance carriers will offer stand-alone flood coverage, particularly for the highest-hazard exposures. The carriers that do offer stand-alone flood coverage do not write enough policies to be able price the risk efficiently, leading to high prices. Limited supply and limited demand combine to hinder the expansion of private flood insurance.”
Albert Slap
President
Coastal Risk Consulting
“NFIP underwrites government-based flood insurance policies using Flood Insurance Rate Maps [FIRMs], which have come under criticism for being backward-looking and not adjusted for climate change and sea level rise. New technology can flood score every coastal property in the US at extremely high resolution using LIDAR elevation data.
After more than 40 years of servicing NFIP flood insurance using FIRMs, a clean break might be difficult for carriers offering private flood insurance. Flood maps will continue to be important for land use planning, zoning and emergency response, but the adoption of new technology will enable more accurate premiums.”
William Fleischhacker
Executive managing director and leader,
US Flood specialty practice group
Aon Benfield
“Customer awareness is a significant obstacle in the US residential flood market, with many falsely believing they are already protected. Private-market insurers are increasingly pursuing the residential flood opportunity, and capacity is regularly coming on stream. This trend will continue as more carriers embrace the vendor flood models for inland and coastal flood exposure, supported as needed by ample reinsurance capacity.
