How Does the Private Flood Market Compete Against the NFIP?

When a flood risk crosses your desk, your first thought may be the National Flood Insurance Program but did you know the Private Flood Market is giving the NFIP a run for its money? There are many types of risks where a Private Flood Market quote not only beats the NFIP in price but also in additional bells and whistles such as replacement cost for building and contents. Keep reading to see how the Private Flood Market can help you present more desirable quotes to your insureds and win you more business.


Where the NFIP Falls Short


The NFIP, on top of being under extreme congressional scrutiny, utilizes flood zones and elevations that are very broad due to outdated science. Their lack of innovation is the private market’s gain, as technology and sophisticated rate maps allow us to make smarter underwriting decisions and help place more complicated risks. Many insurers today are using catastrophic flood and risk modeling software to understand risks on a more comprehensive level that the NFIP doesn’t match. Targeted rating methods in certain geographic areas and Cat models also help the private market avoid unprofitable risk selections. The Private Market is utilizing new technology and the NFIP is falling short. 


The NFIP rating structure has had issues with cheaper premium policies which are more likely purchased than properties where the price is much higher due to the perceived potential for a loss. These high prices force the insureds to look elsewhere for coverage. It also creates an imbalance between the premiums collected and the anticipated claims. In summary, the NFIP rates are very cheap in certain areas and way too expensive in others. This opens another door for the Private Market to compete. However, for the Private Flood Market to continue gaining market share they need to be more competitive in preferred risk areas. Want to read more about the obstacles facing private flood? Check out our other blogs. 


The lack of options, innovations, and acceptable prices from the NFIP sends insureds and their agents flooding (pun intended) to the Private Market. When considering a Private Market quote make sure the policy wording is accepted by Lenders, like all of DUAL’s Flood quotes are. Looking to get started? Reach out to our Flood team today! Or download our Success Stories eBook to see how we've handled flood risks just like yours, and won more business. 

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