Flood Insurance — Private Insurers Growing

Before the early 2000s, flood insurance sales belonged mainly to the federally run, National Flood Insurance Program (NFIP). Hurricane Katrina put a huge knife into the back of the NFIP and set it reeling and into debt by billions.

It pushed Congress and regulators to encourage more growth in the private flood insurance market. So between 2016 and 2022 the private insurance market grew significantly.

The Insurance Information Institute (Triple-I) said its figures show direct written premiums rising 24% during that time frame. In 2016 there were just 18 private insurers selling flood insurance and they owned 12.6% of the market and had just a little less than $1 billion in direct written premiums.

Today that figure is double.

Adding to homeowners looking more seriously at the private market is the NFIP’s redo of its program and the institution of Risk Rating 2.0 that was fully implemented in April of this year. The goal of Risk Rating 2.0 is to make flood insurance rates match the risk.

It’s kind of working. There are ways built into the program to help some homeowners get around increases. The most popular, and most used, are discounts if the community one lives in does flood mitigation efforts.

The Government Accountability Office (GAO) says that’s pushing billions back onto the continual mounting debt incurred by the NFIP.

Congress wants the NFIP to have an average increase in rates of 5% per year. That’s not happening says researchers at Poulton Associates. NFIP rates fell an average of 9% between 2014 and 2019.

In the meantime, the private market continues to grow. Private flood insurers now own 32% of the overall market. That leads us to which private flood carriers are doing the best. AM Best recently did an analysis.

1. AIG

2022 direct written premium: $175.1 million

2022 market share: 13.4%

2022 adjusted loss ratio: 42%

2. Zurich — U.S. P&C Group

2022 direct written premium: $151.1 million

2022 market share: 11.5%

2022 adjusted loss ratio: 17.1%

3. Berkshire Hathaway

2022 direct written premium: $124.4 million

2022 market share: 9.5%

2022 adjusted loss ratio: 22.8%

4. Assurant

2022 direct written premium: $120.9 million

2022 market share: 9.2%

2022 adjusted loss ratio: 102.9%

5. AXA XL America Companies

2022 direct written premium: $117.2 million

2022 market share: 9%

2022 adjusted loss ratio: 68.5%

6. Swiss Re Group

2022 direct written premium: $91 million

2022 market share: 7%

2022 adjusted loss ratio: 17%

7. Sompo Holdings U.S. Group

2022 direct written premium: $71 million

2022 market share: 5.4%

2022 adjusted loss ratio: 38.6%

8. Liberty Mutual

2022 direct written premium: $70.9 million

2022 market share: 5.4%

2022 adjusted loss ratio: 18.1%

9. Chubb

2022 direct written premium: $48.2 million

2022 market share: 3.7%

2022 adjusted loss ratio: 54.4%

10. Allstate

2022 direct written premium: $44.2 million

2022 market share: 3.4%

2022 adjusted loss ratio: 55.4%

Source link: PropertyCasualty360.com — https://bit.ly/4aJlGJ8