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Facing Floods

ELA
With devastating floods affecting large swaths of New England, independent insurance agents must do all they can to disabuse their clients of any notion that a typical homeowners insurance policy covers flooding.
With devastating floods affecting large swaths of New England, independent insurance agents must do all they can to disabuse their clients of any notion that a typical homeowners insurance policy covers flooding. A recent survey from the National Association of Insurance Commissioners (NAIC) found that 33% of insured homeowners incorrectly believe that a flood would be covered.

Yes, agents are fully aware of that fact. Of course they are. But are their customers aware? It might not come up in conversation, but it bears mentioning. Agents should repeat it frequently for those insureds that opt not to pick up flood insurance backed by the National Flood Insurance Program (NFIP).

Also, agents should not assume that a homeowner doesn't need flood insurance if he or she is not in a flood zone designated by the Federal Emergency Management Agency (FEMA). Many flood maps are so dramatically out of date that those talented job-seekers the insurance industry tries to lure into the business were not born when they were last updated. Over time, topography of the region has changed and flooding can occur where it might not have been previously anticipated. Examine all options for your clients and never assert that flood insurance is not available without fully investigating that statement. Any home can be in a flood zone.

With flood insurance a hot topic in Congress, the NFIP is poised for necessary reforms. The embattled federal insurance program could become more useful to all insureds and any changes that might be made should be closely watched by agents.

Every state insurance department in New England has mandated flood insurance training for insurance agents. Instead of viewing it as just another continuing education requirement, agents must look at this edict as an opportunity to assist their customers in a new way.

And, as agents update their own knowledge, they may find their advice falling on newly alert ears. It was suggested at a recent meeting of the Cape Cod Insurance Agents Association that a silver lining of the coastal insurance crisis could be that policyholders are becoming more insurance savvy and paying more attention to what their increased premiums actually offer. They scan the news for insurance-related articles, they read their policies. Reinsurance has become a significantly less fuzzy concept for many coastal residents.

This does not, say insurance agents in-the-know, mean that they are any less unhappy with premium increases and/or their direct tickets to the FAIR Plan. No one is delighted that double-digit increases have prompted them to take a look at their policies before filing it away in a drawer. However, any positive benefit that can be derived from a negative situation helps.

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