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Munich Re America introduces inland flood insurance product for U.S. homeowners


August 5, 2015   by Canadian Underwriter


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Munich Reinsurance America, Inc. has introduced a new personal lines inland flood insurance product designed to provide more options for homeowners in low-to-moderate hazard flood zones in the United States.

According to the National Flood Insurance Program (NFIP), flood is the most common natural disaster in the U.S. and all 50 states have experienced floods or flash floods over the past five years. However, less than 1% of eligible homeowners who live outside of the Atlantic and Gulf coast areas (in low-to-moderate hazard flood zones) have flood insurance coverage. Yet, NFIP data shows those areas account for over 20% of NFIP claims and one-third of Federal Disaster Assistance for flooding, Munich Re America said in a press release on Tuesday.

All 50 states have experienced floods or flash floods over the past five years

Since 1968, flood coverage had to be purchased separately through the NFIP and no private market alternatives to the federal offering have existed for the average homeowner until now, Munich Re said.

Tim Brockett, Munich Re America’s senior vice president, Reinsurance Division Strategic Products, told Canadian Underwriter that the product is limited to the U.S. as there is only U.S. loss data on which to base pricing. “We are also able to utilize the Federal Emergency Management Association’s (FEMA’s) flood mapping,” Brockett said. “Product expansion to Canada is not possible in the short term, but could be considered eventually.”

The new Inland Flood Coverage Endorsement can be attached to a consumer’s existing Homeowners insurance policy purchased through a participating insurance carrier, thus eliminating the need for a separate, standalone flood policy, the release noted. It also provides less restrictive flood coverage and offers limits and premiums that are more in-line with what homeowners in low to moderate flood zones may need than the NFIP.

Discussions with prospective carriers and state regulatory authorities are currently in progress.

“Average homeowners in a lower flood hazard area seek basic protection for their home and personal property at a competitive price,” Brockett added in the release. “Our new Inland Flood Coverage Endorsement is designed to solve that need; it can be offered at lower limits and tailored to the underlying homeowners policy, thus eliminating the cost and administrative burden of a separate, stand-alone flood policy.” [click image below to enlarge]

The new Inland Flood Coverage Endorsement can be attached to a consumer’s existing Homeowners insurance policy purchased through a participating insurance carrier

The new Inland Flood Coverage Endorsement can be attached to a consumer’s existing Homeowners insurance policy purchased through a participating insurance carrier

Full implementation services for insurance carriers that choose to offer the Inland Flood Coverage Endorsement will be provided by Hartford Steam Boiler Inspection and Insurance Company, an affiliate of Munich Re America. Flood claims management services will be available through Specialty Insurance Services Corporation, an affiliate of American Modern Insurance Group and Munich Re America.

In Canada, Co-operators General Insurance Company launched insurance coverage for overland flooding in Alberta in May, designed to protect against flooding caused by an overflow from a body of water, sewer/water backup and accumulation of surface water caused by heavy rain. Planning was also underway to make the product available across the country.

In June, Aviva Canada also announced that it is offering overland water protection for residential property owners and tenants through its network of independent insurance brokers. The coverage – offered as an add-on to personal property insurance policies that have sewer back-up protection in place – can be purchased through brokers in Ontario and Alberta and will be offered in other provinces throughout the rest of the year.


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