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DHS FEMA NFIP Services - eWaterwark
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Reaching for 100-Percent Coverage
Melissa Klein, Ogilvy Worldwide
Special Flood Hazard Areas (SFHAs) receive this designation because hydrologic, hydraulic, and
historical data show that significant floods have occurred and can occur in the area. Under Federal
law, homebuyers in SFHAs are required to get flood insurance to receive a loan from a federally
regulated lender. While the requirement provides many residents in high-risk areas with financial
protection against flooding, many others remain unprotected. All SFHA residents, regardless of their
mortgage status, need to assess their flood risk and protect themselves with flood insurance.
Since 2004, the NFIP has increased its efforts to raise the number of those protected with flood
insurance through marketing and through collaboration with the insurance and lending industries.
Thus far, the results have been significant. In May 2005, the NFIP policy base had grown by 7,000
more than the previous year. Just 1 year later, the policy base had grown by 78,000. Despite the
NFIP's unprecedented policy growth in the last 2 years (almost 12 percent), more than 50 percent of
buildings at the highest risk for flooding remain unprotected by flood insurance.
In light of these statistics, FEMA's Mitigation Division has committed to helping insure 100 percent
of the homeowners, renters, and businesses located in the nation's SFHAs. The NFIP's marketing
program, FloodSmart, is working with community leaders and local officials, professionals in the real
estate and financial fields, insurance agents, and others to help spread the word and reach this goal.
FloodSmart also conducts targeted outreach to consumers and stakeholders in SFHAs.
Facilitating Growth
FloodSmart has conducted analyses of new sales and retention rates to show which flood insurance
markets have seen significant increases in policies as well as those that have yet to be reached.
Studying recent flood events also reveals high-risk areas with low flood coverage, where the NFIP
policy base can be increased. For instance, after the June 2006 floods that hit the Northeast U.S.,
it became apparent that many residents of high-risk areas in that region lacked flood insurance
protection. According to a recent RAND Corporation study of market penetration, only 29 percent of
households in SFHAs across the Northeast are covered by flood insurance. That number drops to a mere
1.5 percent of coverage in the region's low- to moderate-risk areas.
In addition, many parts of the Southeastern U.S. are in high-risk areas, where flooding from
hurricanes and tropical storms is a constant threat during the summer and fall months. Even after the
devastating floods from Hurricane Katrina in 2005, Mississippi remains underprotected in the high-risk
areas of the state. Only approximately 20 percent of households in the 5.2 million acres located in a
floodplain across the state are insured against flooding.
The NFIP recognizes that holding onto the policies that are already in place is less labor- and
cost-intensive than selling new policies. And policy retention is essential to increase the number
of NFIP policies in force. According to a recent analysis, retention is lowest among first-year
policyholders. Therefore, to boost retention rates, the FloodSmart campaign is also reaching out
to all new purchasers of NFIP policies by sending them customized monthly mailings.
While targeted marketing and outreach is necessary to raise awareness where policies are most
needed, reaching 100-percent coverage in high-risk areas requires support from each NFIP community
to make flood insurance protection a priority.
Crossing the SFHA Boundary
While working together to achieve 100-percent coverage in SFHAs is a high priority, properties in
non-SFHA areas also are vulnerable and should be protected. To illustrate the need, 20 to 25 percent
of all flood insurance claims made annually continue to come from low- to moderate-risk areas.
Also, while a significant percentage of recent NFIP policy growth has been through the purchase of
Preferred Risk Policies (PRPs), increasing by 30 percent between May 31, 2005, and May 31, 2006,
non-SFHA policy growth continues to lag for "other residential" and "non-residential" buildings.
These also represent a PRP marketing opportunity for insurance agents.
For more information about FloodSmart's flood insurance marketing strategies and outreach messages
and materials, visit the
FloodSmart.gov website.
Melissa Klein is an Account Representative with Ogilvy Public Relations Worldwide, one of the J.
Walter Thompson (JWT) companies supporting the NFIP's FloodSmart advertising and pubic awareness
campaign.
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| Business-Driven Technologies.
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| Last Modified:
Tuesday, 27 May 2008 |
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