CLAIRE WILKINSON Threats harder to ignore
As the nation watches the Midwestern floods carry homes down the Missouri River, more Northeastern homeowners are likely to buy flood insurance, says the Insurance Information Institute – and while most insurance companies carry flood coverage from the federal government, more companies are starting up their own lines.
And there’s plenty of room to grow. The nation’s homeowners overall had a 17 percent rate of carrying flood insurance, according to the institute’s recent survey of about 1,000 owners. Only 20 percent of Northeastern homeowners reported having flood insurance in 2007, but that’s a big jump up from 2006, when only 10 percent reported having it.
That’s because flooding threats have become harder to ignore, particularly for coastal homeowners, said Claire Wilkinson, vice president of global issues for the I.I.I.
“We’ve seen some pretty serious flooding events in the past few years,” she said, such as the hurricanes of 2005 or a major nor’easter that flooded homes last year.
One official at the Federal Emergency Management Administration disagrees – not about the findings that show an increase in flood coverage, but about residents’ reasons for get-ting it.
“Nobody likes to pay for flood insurance,” said Daisy Sweeney, insurance specialist for FEMA’s northeastern region. The numbers are rising, but mostly because banks now require mortgage borrowers to have flood insurance if their homes are in official flood zones. FEMA began the requirement after massive Midwestern floods in 1993, and its reach was strengthened yet again after the hurricanes of 2005.
The only time Sweeney recalled homeowners asked about increasing their coverage was during a meeting in Scituate; even though the town has had its run-ins with flooding, Sweeney said the request was
unexpected.
“I was shocked,” she said, mostly because the phones at FEMA just ring with homeowners complaining about the requirement.
Flood of Insurance
Complain they might, but more of them are getting it in Massachusetts.
In the last five years, 10,000 more people have gone on the National Flood Insurance Program, the federally mandated program that sells subsidized insurance mostly through private insurers. FEMA’s most recent statistics show that nearly 50,000 homeowners have flood insurance in Massachusetts.
Some companies offer entirely private flood insurance, which provides broader coverage for homeowners who ask for it. Although I.I.I.’s Wilkinson says she believes more insurance companies are selling entirely private coverage, most people still get their flood coverage through companies whose policies are government-subsidized.
Mark Schussel is a spokesman for Chubb, which sells FEMA’s standard flood insurance program product, but as of 2006 also offers private flood insurance that expands coverage. Where the national program provides for up to $250,000 in losses, Chubb’s covers up to $15 million, and also provides $7,500 in relocation expenses for those displaced by flooding.
Schussel said most private insurers stayed away from flood insurance because little data was available to help insurers calculate risks – that’s why the national flood program be-came necessary in the first place. But that flood program has lead to the accumulation of more claims information, so private insurers now feel more confident in calculating risk, leading companies like Chubb to branch out, he said.
And although he declined to give specific numbers, Schussel said Chubb has also seen more interest in flood insurance for the same reasons Wilkinson cited.
“Every time there is an incident like the Midwest floods, there is a spike in demand,” he said. “As soon as the event disappears in people’s minds, that demand slows down.”
