How changing climate patterns affect insurance agencies – PropertyCasualty360

At the consumer level, there is a huge lack of understanding when it comes to knowing that homeowners insurance policies do not cover flooding. (Shutterstock)

Changing climate patterns now impact just about every industry, but insurance is one of the most affected. More than the increased risk of flooding and other disasters, climate change has ushered in an opportunity for insurance agents to help clients and prospects understand the risk of flooding faced by all Americans. In essence, the changing climate has put every property owner at risk, and agents have a chance to be part of the solution.

Climate change has spawned historical catastrophes

Something extreme is definitely happening with the weather. Throughout 2019, the Missouri and Mississippi Rivers experienced historical flooding; a Category 5 hurricane formed in the Atlantic for a record-breaking fourth year in a row; Texas had a one-in-500-year flood for the fifth year in a row; and the 12 months ending April 2019 earned the title of “wettest on record” in U.S. history.

Add to that Florida’s king tides, which is especially high water that can cause tidal flooding. “For scientists, researchers and climate change activists, it’s a crystal ball of sorts: a brief, physical realization of South Florida’s perilous future if nothing is done to combat rising seas and global temperatures,” said a recent article in the South Florida Sun Sentinel.

King tides are now occurring monthly along the entire Atlantic seaboard, rather than once or twice a year in South Florida, as was historically the case.

Then there were the 2018 mudslides in California, which killed 23 and were responsible for at least $177 million in property damage. Include the recent floods in the Arizona desert, and you’d be hard-pressed to argue that flooding is not the new normal.

Much of this — or at least the intensity and increased volume of flooding events — is being attributed to climate change. In fact, the two wettest storms in the past 70 years occurred in 2017 and 2018: Hurricanes Harvey and Florence. According to the National Resources Defense Council, storms are 10% more intense due to climate change, as a warmer atmosphere stores more water vapor. Increased coastal development and increased urbanization (think asphalt roads, parking lots, buildings, etc.) exacerbate the impact of these flooding events.

Where agents come in

Flooding is the number one most common disaster in the U.S., yet it is the least covered of the major perils. The “coverage gap,” or the difference between those that have flood insurance and those that need it, is on the order of 50 million homes. Only one in 10 homes that are at risk of flooding actually have coverage. Insurance agencies can be leaders in helping their clients get the coverages they need, and at the same time, protect their businesses from risk.

At the consumer level, there is a huge lack of understanding when it comes to knowing that homeowners policies do not cover flooding. The good news is, there are many opportunities for agents to be part of the solution:

1. Educate homeowners about their risk of flooding and that their homeowners policy does not cover such events.
2. To make it real for the policyholder, it’s helpful to have local, recent examples for the policyholder. For example, South Florida agents could talk about the threat of king tides, or St. Louis agents could explain the sustained rains and the unique height of the Mississippi River and the Missouri River flooding this year.
3. Recommend flood insurance along with every homeowners policy. Not only will this grow your business, but it will also protect you from E&O claims where the homeowners say they were not informed of their risk.
4. Get a quick quote to put a real number in front of your client. Some websites will deliver a bindable quote in under two minutes without referral, delay or need for trailing documents like an elevation certificate.

Viewing the inevitability of climate change and its effects as an opportunity rather than a risk is what will set your agency apart — now, and especially into the future.

Jim Albert ([email protected]) is founder and chairman of Neptune Flood in St. Petersburg, Fla. These opinions are his own.

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Source: propertycasualty360.com