A few years back, I contributed an article (“The Coastal Coverage Challenge, October 2008) to American Agent & Broker that outlined some of the numerous challenges agencies face in writing insurance in the coastal areas of the U.S. What has changed since then?

Keep in mind our agency is located on a barrier Island (Long Beach Island) off the coast of New Jersey. We took a direct hit from Superstorm Sandy on Oct. 29, 2012. A lot of the challenges and changes we've had and continue to face are a direct result of Sandy and the devastation it caused.

We had suggested in 2008 that agencies break down the challenges they face into three categories: differentiation, education and communication. These categories are still essential when an agency is formulating its business plan to write coastal homeowner, flood and business insurance.

Related: Read “Power of the Package.”

Taking into account all the weather-related events over these past 5 years, we are going to keep these categories to incorporate later. First, let's focus on three other concerns: availability, pricing and consumer knowledge.

Availability, or lack of it, has reared its ugly head for several years now. Since 2008, we have experienced a push away from the coast by most of the national and regional carriers. Most if not all have either cancelled all of their coastal business, or have implemented stricter underwriting guidelines. In the coastal states where we write business, most of the market is being handled by excess & surplus lines carriers.

Now we're seeing these E&S carriers tighten their underwriting guidelines. Availability is showing signs of decreasing with some carriers. Several have met their capacity and have temporarily suspended new business. They are discussing different deductibles for the future and possibly changing some of the availability for the highest risk properties on the oceanfront or bayfront.

The National Flood Insurance Program (NFIP) has not yet changed into restricting coverage, but there could be issues in the near future about availability of flood insurance due to new building codes, elevation requirements and pricing.

Pricing in general has been somewhat stable, but we believe that is going to change dramatically in the near future. It would be logical to assume that these increases will not just be felt in the coastal areas, but throughout the country. Natural catastrophes throughout the world have become increasingly common over the past few years, and the U.S. has had more than its fair share, with hurricanes, floods, tornadoes and hail storms.

Related: Read “4 Sandy Lessons.”

Our E&S carriers have started to warn us about sizable increases in homeowners' premiums as the year goes on. We have received increase notices as high as 50 percent to 100 percent, especially for condo policies along the shore. It would appear that the average increase will be at a minimum in the 20 percent to 25 percent range for homeowners.

With the enactment of the Biggert-Waters Act last year, the cost of flood insurance will certainly rise, in many cases dramatically. The removal of subsidies for pre-firm secondary buildings and businesses will increase these premiums 25 percent until these types of properties are more in line with actuarial rates.

Add to that the devastation that Sandy left at the Jersey shore, and consumers are in a quandary about what to do to their damaged properties and how the repairs may affect their flood insurance rates in the immediate future.

Our region has been left with thousands of substantially damaged homes which must be demolished, raised or moved. The new Advisory Base Flood Elevations (ABFEs) have been posted by the FEMA/NFIP, but final enactment of these guidelines may not be available until this summer.

This leaves a lot of people without places to live year round, without their summer homes or without their summer rentals, which they need to pay their mortgages.

Rumors that have been circulating saying that people will be paying $10,000, $20,000 or more for flood premiums are not warranted. Although it makes a good story in the media, in reality these types of increases will be rare if consumers would check the facts.

This leads us to consumer knowledge and brings up two important categories from 2008: education and communication.

People are more hooked into social media today than they were in 2008. Agents are a part of this, with many opportunities to communicate with anyone who has a computer or cell phone.

This means consumers are more aware of what is going on and can research any topic they want to know more about, including insurance for their homes and businesses.

But a little knowledge can be a disadvantage, as now consumers think they know more than agents about insurance. That is why it is more important than ever for agencies to communicate and educate their customers.

Social media options help agencies more than they did 5 years ago, but they can't replace the everyday means of communicating with your clients with good old-fashioned customer service: picking up the phone and talking to people, placing information “stuffers” with their policies, using newsletters to keep them up to date.

Your clients should hear about premium increases from you, not on TV, online, or worse, from a competitor. Your clients will always welcome suggestions from you about keeping their premiums lower.

Since handling thousands of Sandy claims over the past 6 months, we find now is the perfect time to analyze your agency's claim handing procedures. Honestly ask yourself and your staff how you would handle hundreds or thousands of claims in a short period of time.

Related: Read “Anticipate the Superstorm.”

Disasters are the times when your clients need you most. No one wants to lose a customer because of claims mishandling. The only way to prevent this is to prepare both your staff and your clients for the claims handling process.

Although a lot has changed since 2008, many of the challenges we face in writing coastal or any other insurance has remained the same. It often seems like you have to go back to the basics to keep things in perspective.

Keep your customer educated and informed and you will have a customer for life.