Munich Re Offers Flood Coverage for Low-Risk Homeowners

PRODUCT: Inland flood insurance endorsement

COMPANY: Munich Reinsurance America Inc.

BEST RATING: A+ (Superior)

AVAILABILITY: Coverage is available through participating insurance carriers.

FOCUS: A few months ago, reports of flash flooding dominated headlines in the wake of Hurricane Patricia in Texas and Hurricane Joaquin in South Carolina. Still, less than 1% of homeowners located outside Special Flood Hazard Areas purchase insurance protection from the government against losses from flooding.

Homeowners who lack flood insurance coverage remain a relatively untapped market. Munich Reinsurance America’s new inland flood coverage endorsement is a timely opportunity to remind clients how important it is to prepare for a potential catastrophe.

“Munich Re has been providing insurance for personal and commercial lines flood risk on a global basis for decades,” says Tim Brockett, senior vice president and strategic products manager at Munich Re. Combining the capabilities of Munich Re’s various operating entities—its Reinsurance Division, Hartford Steam Boiler and American Modern Insurance Group—the new endorsement can help close coverage gaps in existing homeowners policies and ultimately reduce agent errors & omissions exposure and claims disputes.

“When Biggert-Waters was signed, we saw an opportunity to push the objective of working with clients to address the risk management needs of policyholders,” Brockett says.

UNDERWRITING: Munich Re’s inland flood endorsement offers coverage enhancements over and beyond what an NFIP policy offers. As a private-labeled product, the endorsement is available for purchase only through a participating insurance carrier.

Single limit coverage is available from $5,000 to $50,000. There is no separate inland flood deductible. The policy covers dwelling, contents, basement personal property, loss of use, property moved to safety and debris removal. Basement personal property and loss of use are sublimited for the higher limit options from $25,000 to $50,000. Loss settlement follows the underlying policy and can be replacement cost or actual cash value. A 100% quota share, multi-year treaty reinsurance contract is available for the endorsement.

Single and multiple family dwellings up to four units are eligible for coverage. Coverage is available for property locations in all FEMA flood zones, except those beginning with prefix A or V, and in all states except Hawaii and Florida. Experienced flood claim specialists at Specialty Insurance Services Corporation (SIS) manage product support service claims. SIS is a subsidiary of American Modern Insurance Group Inc., an affiliate of Munich Re.

Hartford Steam Boiler Inspection and Insurance Company, also an affiliate of Munich Re, provides turnkey implementation services, including form development, filings support, ongoing product management, systems support, training, marketing materials and communications support.

MINIMUM PREMIUM: None.

TARGET: The inland flood endorsement is available to homeowners who reside in low- to moderate-risk areas outside wind surge-exposed Atlantic and Gulf coastal counties. It comes in the form of a private-labeled endorsement that attaches to the insurance company’s homeowners or dwelling form.

COVERAGE TERRITORY: All U.S. states except Florida and Hawaii.

CONTACT: Tim Brockett, senior vice president, strategic products manager; Munich Reinsurance America Inc., 685 College Rd. E, Princeton, NJ, 08540; 609-243-4781.

Ronimarie Acord is an IA contributor.