Swiss Re has partnered with Florida-based homeowners insurer Security First to provide policyholders with increased protection from water damage, including flood coverage.
Ratings are to be based on Swiss Re’s proprietary flood model and priced according to the individual risk exposure.
This allows for a more sophisticated delineation of premiums based on factors such as location, type of construction and insured value, rather than relying on inaccurate rating tables.
“The need for this solution was clearly demonstrated by the devastation caused by hurricanes Harvey and Irma last year, commented Keith Wolfe, President U.S P&C, Swiss Re.
Swiss Re states that the U.S experiences economic losses of about $15 billion from flooding each year, of which only $5 billion is insured, resulting in a protection gap of approximately $10 billion.
“Swiss Re’s vision is to make the world more resilient and this innovative partnership is an important step in closing the property protection gap in Florida.”
Security First policyholders will be among the first to receive enhanced coverage with a single deductible for wind and flood at a price that accurately reflects the risk.
“This innovative policy is proof that flood is insurable in the private market and we believe it can be replicated throughout the U.S to help solve a profound under-insurance issue,” said Wolfe.
Security First has started offering the optional coverage to its customers; the company will handle the distribution, administration and claims servicing.
“Using the Swiss Re model will help mitigate adverse selection by spreading the risk among more Florida residents, not just among those with the highest risk.”
“Combining flood risk with wind risk and other perils into one policy with one deductible means there is no longer a need for consumers to distinguish between a loss being partially wind or partially flood; the loss is simply covered,” added Wolfe.
Locke Burt, Chairman and President at Security First, said, “Before this partnership, flood insurance was not an option to add to an existing homeowners insurance policy, but now our customers will not have to worry about coverage for flood damage or having to manage a separate policy from a separate company.”
“We are delighted to offer Floridians comprehensive flood insurance protection at an affordable price.”