Private Flood Insurance Market Expands After NFIP Changes
The marketplace for private Flood Insurance has continued to grow in the months since a new flood-risk rating system went into effect for National Flood Insurance Program (NFIP) policies. A recent report from AM Best shows that 11 new private Flood Insurance carriers entered the market between 2021 and 2022, and a total of 151 new providers have started offering it since 2016, Insurance Journal’s MyNewMarkets reported on Oct. 16.
The NFIP changes, which began in October of 2021 for new policies and April of 2022 for existing policyholders, aimed to shift the U.S. government-backed Flood Insurance program to a more accurate and equitable pricing methodology. Known as Risk Rating 2.0, the new pricing model drove up rates for many consumers and even prompted lawsuits from multiple states. The transition has ultimately sent more property owners to the private market, said Matthew Ritchie , Senior Underwriter, Flood, Burns & Wilcox , Morehead City, North Carolina.
“A lot of individuals who would normally go to the NFIP are now seeing those rate increases,” Ritchie said, “so they are starting to look elsewhere to see if they can get something more competitive.”
Tropical Storm Hilary in California over the summer and other severe weather events could put the private market to the test, the MyNewMarkets report noted. According to Brad Turner , Vice President, National Product Manager, Flood, Burns & Wilcox, Morehead City, North Carolina, not all new private Flood Insurance providers have found success.
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