A customer may not know what flood zone in which he or she lives, but agents have that kind of information at their fingertips; it's easily accessible from The National Flood Insurance Program (NFIP), FloodSmart.gov, any Write Your Own company or from the community they live in.
We have all heard or read about the terrible consequences flooding can cause. In a recent open letter to insurance agents, Edward L. Connor, deputy assistant administrator for insurance for FEMA, states, “Flooding is America's No. 1 natural disaster. Too many property owners remain uninformed about flood risk and flood insurance. Property owners continually report they were unaware they could buy flood insurance, thought they were ineligible for coverage or were told they didn't need it.”
As agents, we all say we know that –so what can we do about it? I have sat in on many flood insurance meetings over the years at both the local, state and federal levels, and I am amazed at the stories consumers have told their legislators and representatives from NFIP or FEMA. They say they have not been informed by their agent about the cost and availability of flood insurance. Others have said that their agents suggested they do not need flood insurance.
While some of this may occur from time to time, the truth actually lies somewhere in between. I also have heard clients say they had no information about flood insurance or had never heard about it, despite regular ads about flood on TV, in the newspapers, and all over the news when flooding does occur. Furthermore, most insurance companies and agencies alert their clients on every homeowner policy that damage from flood is not included in this policy.
What can you do to prevent such accusations? I again refer to the open letter from FEMA, which states among five items of advice, the No. 1 thing agents should do is “dispel the myth that flood insurance is only for buildings in high-risk areas. Low- to moderate-risk areas also flood–25 percent of all NFIP claims come from these areas.”
According to Linda Mackey, IIABA flood program manager, “It can flood anywhere at any time. We all live in a flood zone.” Case in point from my coastal market area of Ocean County, N.J.: The most flood-related claims we have had over the past few years resulted from 12 inches of rain in 2 hours, which flooded numerous homes in a subdivision more than 10 miles from the ocean, bay, lagoons, or any river or creek. The area is a preferred policy zone.
Other advice from FEMA:
? Give them the facts about flood insurance costs. We still find most people think flood insurance is expensive, when in reality if built to compliance and complete underwriting information (elevation certificate) is provided, the property can be insured at an affordable rate.
? Make clear that not required doesn't mean not needed. All properties are at risk, regardless of the flood zone.
? Provide your clients with helpful information. There is a lot of information and material you as an agent and your customers can get on sites like the NFIP Web site at www.fema.gov/business/nfip/.
? Refer your clients to www.FloodSmart.gov for information about flood risk, flood insurance claims and flood mitigation measures.
In researching information for this article, I have copied dozens of pages from these helpful Web sites. Agents would be hard pressed to say they don't know enough about flood insurance to effectively advise a customer or write a policy.
If you are still not convinced you know enough about flood insurance, let's talk about two other important areas that may hit home with every agent: E&O and customer relationships.From an E&O standpoint, Bob Butler, vice president, flood operations, Selective Insurance Company of America, said it best when outlining some of the 2008 flood insurance issues: “E&O concerns continue due to the chance agents do not offer property coverage, contents coverage, adequate limits, excess coverage, and have a waiver signed by the client when they have been made aware of a coverage but declined.”
As an instructor for the IIABA/Swiss Re E&O program in New Jersey, I emphasize having a signed flood insurance waiver form for any property coverage written. Lastly, your relationship with your clients is paramount. You are their trusted advisor and they look to you for professional advice. We as agents should present to each of our clients all of the policies and coverages they need to protect their assets and minimize their risks.
As a Trusted Choice agent–and through my relationship with IIABA, NFIP and Selective Insurance Co. of America–I am required to have the knowledge and expertise necessary to properly protect my clients from risk of flood and to make coverage easy to access for my agency and my clients.
Professional agents who create a plan and are informed, available and proactive should be able to answer flood zone questions and explain the coverages to every homeowner in the United States. Dave Wyrsch, owner of The Van Dyk Group at the New Jersey shore, is past president of IIABNJ, former recipient of the National Flood Insurance Program agent of the year award, and member of the National Flood Insurance Producer Council