“It’s clear that there is a lot of demand for flood insurance and an inadequate set of solutions in the market today, so we worked with our producers to design a product that would address what customers are looking for,” mentioned Paul VanderMarck, chief know-how and innovation officer at SageSure.
Around 70% of Texas owners affected by flooding from 2017’s Hurricane Harvey didn’t have flood insurance coverage, in accordance with knowledge from CoreLogic. High ranges of uninsured losses have been additionally seen within the 2016 Tax Day floods, and the 2021 flash floods in South Texas.
SageSure noticed a constant sample amongst uninsured owners: they’re residents in areas deemed to have decrease danger of flooding by the Federal Emergency Management Agency (FEMA). But the danger stays, VanderMarck confused.
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“Every time you have a flood event, whether it’s a tropical storm or a hurricane, it’s the same story. We saw it during Hurricane Harvey, during the Tax Day floods, and so forth. Many people who live outside the highest risk, FEMA-mapped flood zones are those who end up having flood damage, and often they have no flood insurance,” he advised Insurance Business.
The majority of SageSure’s policyholders are owners in decrease danger areas, not within the highest-risk zones the place residents are required to flood insurance coverage by mortgage lenders. For SageSure, the issue that wanted to be solved was how one can make flood insurance coverage obtainable, compelling, and reasonably priced to individuals who aren’t required to buy any.
Take-up of conventional National Flood Insurance Program (NFIP) protection has additionally remained low for a number of causes, in accordance with SageSure. The prime causes are limits on protection and pricing that doesn’t replicate particular person property danger profiles, in accordance with VanderMarck.
“The pricing is not reflective of the actual risk, which means that people in lower risk areas are effectively subsidizing people in higher risk areas. You see lower take up among people in the lower risk areas because they’re paying, in many cases more than the cost of risk would suggest they should pay, and they’re still not getting complete coverage,” VanderMarck defined.
SageSure’s residential flood program is exclusive out there for 3 causes. The first is that it’s going to supply complete, full limits protection. The second is that the protection is an add-on to their present residence insurance coverage insurance policies, versus a standalone coverage that’s generally discovered within the personal flood insurance coverage market.
“Our product offers multiple levels of coverage, so it’s flexible and can be customized. But more importantly, it includes full limits coverage, which means a homeowner can buy coverage that matches the limits of their home insurance policy,” VanderMarck mentioned.
The profit for brokers is that it takes much less work for an agent to cite as an add-on coverage. “More than half our customers pay their insurance premium through the mortgage escrow process. Our flood coverage can be combined with that, which makes it’s very easy for the customer,” added VanderMarck. “There’s a single bill to be paid, and a single claims adjuster handling your entire claim in the event of a loss, which you can’t have with a standalone flood insurance policy.”
The third distinctive function of SageSure’s providing is that it makes use of a risk-based pricing mannequin for all protection ranges, offering owners with extra reasonably priced options to safe full limits for flood insurance coverage in comparison with the price of NFIP protection. The program is accessible by way of SageSure’s provider associate, SURE, and was developed with a number one international reinsurer.
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“Our fundamental goal is to dramatically increase the take up of flood insurance among our policyholders. The protection gap is real, and we believe we can help close it,” VanderMarck mentioned.
Following optimistic suggestions from a restricted group of producers throughout this system’s comfortable launch at the start of summer season, SageSure is continuing with this system’s growth to different states subsequent yr.
“In our current market where premiums are going up and inflation is driving up replacement costs, agents are naturally reluctant to introduce something new to customers that would increase premiums further. But we’re seen excellent results for agents who have added flood coverage to homeowners’ policies,” shared VanderMarck.
For the insurance coverage head, US owners are already keenly conscious of the catastrophic impression of occasions like Hurricane Harvey. But the flood insurance coverage market hasn’t given them sufficient options to hold their danger.
“The challenge for agents is not on educating customers on their flood risk, it’s whether you have a good solution to offer them for that risk,” VanderMarck mentioned. “There’s a strong latent demand for this coverage, especially when a producer can offer them a compelling product at a good price. As an agent, I wouldn’t be hesitant about introducing this option to customers despite the hard market.”