We’ve been talking a lot about Sandy and the residual effects of the hurricane that hit the Northeast last October. And in the coming months we’ll continue to do so as different issues continue to arise, putting insurance in the spotlight as businesses and residents learn about what is and isn’t covered during the claim process. One of the most important issues that Sandy has brought to the forefront is the need for Excess Flood Insurance. Excess Flood policies offer coverage on top of the policy limits set by the National Flood Insurance Program (NFIP). Limits for residential properties are available up to $250,000 by the NFIP, and up to $500,000 for commercial buildings. Excess Flood policies offer limits that can reach into the millions and are written under separate policy or packaged with a more comprehensive offering. This is very important for high-value homes that have tremendous exposure and potential for loss should they be hit by a storm the likes of Sandy.
In the aftermath of Hurricane Sandy and with losses still tallying up, some providers are talking about the potential for firmer pricing as the demand for Excess Flood coverage has increased and the extent of storm losses has broadened. For example, typically the demand for excess flood coverage occurs before the start of hurricane season and lasts through October, but after Sandy and due to heightened awareness, demand for this product has gained traction, especially on the East Coast. Furthermore, because excess flood insurance is typically written as surplus lines, it’s difficult to quantify the size of the market and the availability to potential insured’s – contributing to the potential for increased rates.
Florida and coastal South Carolina have been heavy consumers of the excess flood product and will most likely continue to be, even with an uptick in demand in the Northeast, according to A.M. Best. Yet in addition to these areas and the Gulf Coast states, the need for coverage has also slowly migrated to the Midwest and West. Individuals and businesses are realizing the devastating damage that can occur from flooding – even if they are not considered to be located in a high-risk area.
At IPOAUSA, our Surplus Lines division focuses on several niches including providing Excess Flood insurance coverage. We have the experience and market capacity to help you place coverage for your insured’s. Give us a call at 877-653-IPOA (4762).
Source: A.M. Best
