Flood insurers in Florida have doubled thanks to technology

The number of companies writing flood insurance in Florida has doubled from 10 to 20 firms in the past year, mainly thanks to the use of new technology to better predict and price flood risk, according to a report by Lisa Miller & Associates.

New technology is making structures more resilient than ever to floodwaters, allowing those insurers to more accurately price risk and compete with the federal government’s National Flood Insurance Program (NFIP), the report said.

“Models are important because the NFIP and parent FEMA don’t use models, they use only maps,” said Lisa Miller, a former Florida Deputy Insurance Commissioner.

“But models help differentiate the flood risk between a property owner in Zone X with mitigation measures versus another person in Zone X without mitigation and insurance premiums are being priced accordingly and more reasonably by the growing number of private flood insurers entering the marketplace. Consumers are benefiting,” said Miller.

New state legislation this spring is encouraging a robust private flood insurance market in Florida, while Congress works this summer to reform the federal government’s beleaguered and costly NFIP, which has nearly two million Florida policyholders, almost 40 percent of all NFIP policies.

Mike Graham of Smart Vent Products, who has been working with modeling firms that are part of the new technology, added: “Just as wind mitigation years ago helped lower homeowners and wind insurance rates, today’s flood mitigation techniques can lower private flood insurance rates, making flood coverage more affordable – and available – for everyone.”

FEMA estimates that for every $1 spent on pre-disaster mitigation, $4 is saved in insurance claims. A study of a two-square mile area in New Jersey that suffered $1.2 million in flood claims losses showed through modeling how pre-mitigation would have eliminated the structural damage and reduced the entire area’s flood height by one inch. That one inch, while it sounds modest, equates to a $20,000 cost avoidance per claim according to FEMA.

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