Most insurance agents will admit that flood insurance isn't an easy sell. Property owners, both individual and commercial, are often aware that their policy covers fire damage, but most don't realize that it doesn't cover flood or mudslide damage.Rarely do these parties investigate the prospects of securing a flood insurance policy, which can cause disastrous ramifications because most floods don't qualify for federal disaster aid. Only floods declared national disasters by the president qualify for federal assistance, which comes in the form of a grant or a federal loan that must be paid back with interest.

At the other end of the spectrum are individuals who know full well that flood coverage is excluded from the policy, yet are still willing to roll the dice and live without it.

Hartford-based Travelers Insurance Co. recognizes the challenge it faces to successfully push flood insurance policies out to the typical homeowner or business owner.

The challenge is reflected in the numbers: Last year, Travelers had about 2,500 independent agents signed up to participate in a Web-based flood insurance program where agents are able to quote flood insurance premiums, complete and submit applications and endorsements, and obtain current policy information.

increased enrollment

In 2001, these participating agents on average ordered 3,000 flood zone determination reports per month from a Web site dedicated to marketing flood coverage, But this year, it appears the flood gates have opened: Program enrollment increased by 2,000 agents, who now order 4,200 flood zone reports per month.

A number of factors helped spawn this wave of volume for Travelers. One is that consumers have begun to feel more vulnerable to floods-even if they don't reside in a flood zone.

"Tropical Storm Allison (in June 2001) served as a wakeup call to people who could not fathom that they were vulnerable a flooding incident," says Cynthia BiVincenti, director of the flood program for Travelers. "This has made it easier for our agents to up-sell a flood provision," she says.

On average, obtaining flood insurance from Travelers ranges from $300 to $500 a year for about $100,000 in coverage.

Another reason for the increased interest is technology enhancements. Carriers have aligned with federal agencies to deliver more sophisticated flood hazard mapping technology to better understand and underwrite flood risk. With the proper risk management technology in place, carriers and agents can market flood products more confidently and more cost-effectively.

Prime the Pump

Travelers offers flood insurance as part of a program sponsored by the National Flood Insurance Program (NFIP), which is administered through the Federal Emergency Management Agency (FEMA).

Carriers such as Travelers are making every effort to use emerging trends, changes in consumer attitudes and new technology to impart to consumers that flood insurance is not a luxury but a necessity. Each year, more U.S. properties in flood plains are destroyed by flooding than those destroyed by fire. Changing weather patterns, increased urban development, and the leveling of forests have reduced the natural ability of property to absorb water.

FEMA has placed more than 19,000 U.S. communities into a flood zone category, and each community is able to participate in NFIP, with premium rates determined by the risks of flooding.

Realizing the effect that environmental and geological permutations can have on property, FEMA has launched an ambitious program to speed flood map updates. The agency is also working with local communities and other agencies to tap into their mapping expertise as it applies to flood maps.

These efficiencies have given carriers and their agents a call to arms to market flood insurance. Without the proper technology, carriers would have been reluctant to touch this kind of business.

The Hartford Financial Services Inc. has a program that targets prospects for flood insurance-predominantly uninsured properties in flood communities.

Agents who visit can click on a specific region on a U.S. map and hone in on flood zones. The system is powered by geographic information technology.

Not only is technology driving new business for this niche segment, but the Web is proving to be an ideal place for agents to meet potential flood insurance customers. For Travelers, the site has proven to be an effective tool to engage potential customers.

When agents log onto the site, a link embossed with a Travelers logo situated on the far right side of the home page instructs agents to click through to proceed with their research. As they click through, agents enter the Travelers Internet Flood Insurance Service area. They proceed to type in a user ID and password within the secure area.

From this point they can begin to research flood coverage costs for a business or individual.

First, an agent enters a specific address or ZIP code to determine if a particular party is in a flood zone or not. There are various classifications of flood zones, from severe to more moderate, as well as whether a property is located in a 100-year or 500-year flood zone, for instance. With the information in hand, agents can determine whether the prospective customer should be placed in either a preferred or standard risk underwriting category.

The features of the site have translated into an increase of ongoing usage: Presently, 32% of all new flood insurance business is being pushed through the Web site, says BiVincenti. New technology features are going to be introduced by Travelers in late 2002 that will bring even more efficiencies to the process for agents.

Lifting the burden

Overall, observers believe that insurance carriers have an excellent opportunity to turn flood insurance market into a profit center.

"Seven or eight years ago, the majority of the heavy lifting regarding flood zone determination reports were performed by underwriters and agents," says Cheryl Small, vice president of specialty markets for Hasbrouck Heights, N.J.-based TransAmerica Flood Hazard Certification. "Now, our industry-the flood zone determination industry-provides the Web ordering tools for agents and underwriters."

Another difference between selling flood insurance today as opposed to a decade ago is the fact that flood coverage had not been top-of-mind for both personal and commercial clients, says Small. "But I think that's going to change because of the technology that's in place to drive greater speed and accuracy."

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