NFIP reinsurers may face total loss due to Harvey
- Author: Zachary Reyes Sep 01, 2017,
Sep 01, 2017, 8:36
Flood insurance: How it works and.
"It won't happen to me."Homeowners mistakenly think that because they're on higher ground or not beside a river, they're protected".
But at some point, this will bring about a "second crisis", Hunter said.
The federally-funded program, which is part of FEMA, is the only protection against flooding that most homeowners and businesses can hope to get, since private policies typically only cover the wind damage that's associated with hurricanes, but not flood damage.
Flood insurance is not included in standard insurance policies.
Most homes in the affected area don't have flood insurance, but about 400,000 homes in the counties affected by Harvey do have policies.
Over the past several years, the soft reinsurance market has allowed primary insurers to obtain favorable terms from reinsurers, including higher limits on catastrophe programs and extended hours clauses.
As Texas continues to attempt managing the destruction from Hurricane Harvey, Congress is due to consider an appropriations package that, as is, would rescind almost $876 million from the Federal Emergency Management Agency's Disaster Relief Fund.
According to the National Flood Insurance Program, only a small percentage of property owners have flood insurance. With little more than a month before expiration, it may be a tall order to rewrite the national program while losses from Harvey are still coming in. The NFIP placed a significant reinsurance program at the start of this year, ceding $1.042 billion of risk to global reinsurers and Lloyd's of London syndicates, so losses are expected here.
The Federal Trade Commission (FTC) has issued a warning about flood insurance scams surfacing in the wake of Hurricane Harvey.
Neither Northbrook-based Allstate nor State Farm is making damage projections, but both firms have lots of policyholders in Harvey-ravaged areas, and the companies already have deployed thousands of claims specialists.
Beware of fly-by-night contractors who offer to fix your home.
A lawsuit against the insurance company can also be filed. Homeowners would likely not see much changes to premiums, and those in flood zones in need of a new mortgage that requires flood coverage should able to secure a policy.
The number could grow as the slow-moving storm remained a threat after spending days over Houston.
Superstorm Sandy survivor Anthony Carone recalled his dismay when he discovered the destruction in the basement of his home after the storm moved through, and remembered thinking: "It makes you really stop and wonder what the federal government will do to help".