The Flood Insurance market is steadily evolving, with technology playing a key role in how risks are assessed, priced, and managed. Advanced modeling tools, data analytics and digital platforms are making it easier to identify flood exposures and offer more customized solutions — helping both brokers and clients navigate an increasingly complex landscape.
In this Expert Q&A, Jacob Martin, Manager, Flood, Burns & Wilcox, Charlotte, North Carolina, shares insights on how technology is shaping the future of Flood Insurance, why the private Flood Insurance market is growing, the common misperceptions about flood risk, and what brokers should keep in mind when helping clients protect their property.
How would you describe the state of the Flood Insurance market right now?
The Flood Insurance market is fairly soft at the moment and there is a lot of capacity available. Rates have been on a downward trend. There are some exceptions to that, though, and harder-to-place risks are still a challenge. In Southern Florida, for example, high-value properties in places like Naples, Fort Myers and the Florida Keys have difficulty finding capacity. We often see homes that are at $5 million or more in replacement costs having trouble finding insurance coverage — especially if their home is built on a slab.
What Flood Insurance solutions are available for these hard-to-place properties?
For many of these clients, if they can get an insurance company to offer coverage, the price is so high that they choose to self-insure. However, we can often find options for them. This may require a layering strategy in which one carrier will take the first $1 million, for instance, and then we build layers of coverage on top of that. Layering is an approach we take when there is an exposure issue or a capacity issue. If a property has an incredible amount of exposure, the insurance company will likely want to cap their losses, so we have to seek additional markets to write over top of that to insure the full value of a risk. There are also parametric options that can provide wrap-in coverage around gaps in traditional Flood.
What are the most pressing challenges regarding Flood Insurance today?
Our biggest issue is education in what a Flood Insurance policy covers. We spend a lot of time educating brokers, which is part of the value we bring as flood experts. From the homeowner’s side, there is an education gap on when they should buy coverage. We see that after major weather events — the number of uninsured losses from Hurricane Milton and Hurricane Helene in the last year was astronomical. Many of those homeowners were not in a flood zone so they were not required by a mortgage company to have Flood Insurance. Just because you are not in a flood zone does not mean your house cannot flood.
Are there any other common misconceptions about Flood Insurance?
Another Flood Insurance misconception is about coverage for property in a basement. We can often add an enhancement for basement personal property, but it is not automatically covered. Also, many homeowners think Flood Insurance is only necessary near bodies of water. In reality, individuals living on mountaintops or hills — even in places like Los Angeles — often buy Flood Insurance because they are worried about mudflow-related losses. Understanding exactly how “flood” is defined in your policy is crucial. It is not just any water damage — there is a very specific definition. Consulting an expert can help ensure you have the right protection.
Why is Flood Insurance increasingly shifting to the Excess & Surplus market rather than the admitted space?
The E&S market is growing. Data from the Insurance Information Institute shows that the private Flood Insurance market in the U.S. grew by 24% between 2016 and 2022. The private market can offer enhanced coverage — including replacement costs for occupancies; loss of use; property in the basement; scheduling multiple structures; coverage for lawn, trees, and landscaping; and pool refill and repair — and oftentimes at a more competitive price. Clients are seeing the value of the private market in terms of the increased coverage, flexibility, the claims adjustment experience, and the level of service, and they are opting to move to the private market. That trend is likely to continue.
What is Parametric Flood Insurance and what role does it play?
Parametric Flood Insurance is activated when certain conditions are met, such as when water levels reach a specified depth. The payout is predetermined and is based on the magnitude of the event, such as flood depth, rather than the extent of the damage.
Parametric Flood Insurance is designed to cover unique risks or to minimize coverage gaps that traditional Flood Insurance might leave. For example, a business might not need coverage for a building on a hill — they really need coverage for a bridge that could be damaged in a flood. There are multiple types of parametric flood coverage including wide-area and sensor-based solutions.
Wide-area parametric policies can also cover things like golf courses, where the main concern is the land itself. These policies often work over a defined area — say, a 1- or 2-mile grid — and are triggered when a certain percentage of that area is inundated. Once that threshold is met, the policy pays out. This approach lets you design coverage based on how much of an area is affected, creating a custom product to meet the client’s specific needs.
Another important aspect is that in the Flood Insurance space, you typically cannot buy a standalone Business Interruption policy. If a business needs protection for interruption caused by flooding, a Parametric policy is often the only solution. For example, mobile home parks often seek business interruption coverage for the pads they rent.
How is technology reshaping how flood risk is underwritten?
Technology plays a crucial role. Whether or not a property is at risk can vary significantly, even within the same county. For example, an oceanfront house elevated 10 feet may be relatively safe, while a property inland near a major river could have astronomical flood exposure. To succeed in the Flood Insurance space, it is essential to rely on advanced flood models. We leverage these models to analyze the data and accurately assess flood exposure for each client.
What is a flood model?
A flood model is a tool created by data scientists to predict how high floodwaters will rise in a given location. They combine various sources such as data from steam gauges that monitor water levels, storm surge data from past hurricanes, satellite imagery of previous floods, and other sources. The model calculates the potential rise in water levels and maps the expected flood returns, then an expected loss can be calculated. If we know the characteristics of a building — such as its elevation and foundation type — the model can estimate potential damage. For instance, it might predict that a coastal home hit by a Category 1 hurricane could sustain $70,000 in damage. This is called the “probable maximum loss,” which represents the expected maximum amount of loss that insurance companies might expect for that property in a particular flood event.
How is Burns & Wilcox leveraging data and modeling to stay ahead?
At Burns & Wilcox, our Flood Practice Group is strictly an underwriting unit. We strive to be experts when it comes to modeling software and understanding the data and flood risk. The value we bring is having the ability to explain to clients what their actual flood exposure looks like and advise them based on that.
One important way we use these models is through event response. When a major event like a hurricane is approaching, we use data and models to predict potential losses ahead of time. This helps ensure claims can be handled more efficiently.
Better modeling has also allowed us to offer more competitive rates. As data has gotten stronger, Flood Insurance has become a “soft market,” meaning rates have decreased and competition has increased. Rates have come down so much in the last 10 years because of improved data and flood models. We continue to invest heavily in new technology and modeling to provide the best possible flood coverage at the most competitive prices.
What is IssueQuick and how does it help serve clients in the Flood Insurance marketplace?
IssueQuick is a proprietary quote-bind-issue portal developed by Burns & Wilcox for clients seeking a fast, direct, and fully digital experience. Quotes can be produced in about five minutes, and binding and issuing can happen the same day. It is also a direct-bill platform, which adds convenience and value for many clients.
We currently have the Hiscox FloodPlus product hosted on the IssueQuick platform, one of the most robust Flood Insurance forms in the marketplace. It offers enhanced coverages beyond what a standard NFIP policy provides, particularly when it comes to contents coverage. For example, the product does not have the exclusionary language an NFIP policy includes around contents in an enclosure. FloodPlus also automatically provides a sublimit for $15,000 basement personal property and offers replacement cost coverage on contents and dwellings for all occupancies.
Can you walk us through a scenario where modeling or analytics led to a better outcome for a client?
The models are critical to what we do, but no model is perfect. One way we deliver better outcomes for clients is by using an ensemble approach — meaning we rely on multiple models rather than just one. For example, a property in a coastal location on a quarter-acre plot could be surrounded by water on multiple sides, but the ground elevation data used by one model might be inaccurate. It might even assume the land is at sea level when in reality, it is much higher, maybe 16 or 17 feet above sea level, either naturally or on pilings.
If the model incorrectly assumes an elevation of zero, it will generate a dramatically higher premium. This kind of error happens all the time. By using multiple models, we can cross-reference the assumptions and identify when something does not look right. Then we are able to advocate for the client and offer a more accurate, fair rate based on the true characteristics of their property. Investing in the right technology and taking a multi-model approach allows us to fight for better outcomes for our clients.
What tips do you have for brokers serving clients in this sector?
I would recommend that brokers always offer Flood Insurance to their clients. We have seen situations where brokers faced issues for either not offering flood coverage or not getting proper signoffs when clients declined it. Just because a property is or is not located in a 100-year flood zone does not mean it is free of flood exposure. According to FEMA, about 25% of NFIP flood claims occur outside of “high-risk” zones.
This is where Burns & Wilcox can bring significant value. We are here to consult with brokers — whether it is providing insight into a property’s flood risk or helping interpret coverage forms. We see ourselves as a resource to help brokers serve their clients better and more confidently.
Why should brokers and agents partner with Burns & Wilcox?
Burns & Wilcox has a dedicated Flood Practice Group and is a leader in the Flood Insurance space due to our expertise and deep understanding of flood risk. We represent over a dozen Lloyd’s of London syndicates, and all of our products are underwritten through A-rated carriers by A.M. Best. Burns & Wilcox works with a wide range of insurance markets and can offer a lot of different solutions.
We also have a team that truly understands flood risk — so whether a client is a high-net-worth individual with complex property needs or a typical homeowner, we can help. One big advantage is that due to our advanced modeling technology, we do not require elevation certificates, saving our clients time and money.
Flood Insurance
WHY YOUR CLIENTS MIGHT NEED IT: With intensifying storms, rising sea levels, and outdated flood zone maps, many properties face greater flood risk than ever before. Flood Insurance, particularly through the private marketplace, helps protect property owners from the financial impact of increasingly unpredictable weather.
PROTECTS AGAINST: Covers direct flood-related losses, including structural damage, contents, and cleanup costs. Private Flood Insurance policies can provide higher limits and broader protection, including loss of use and basement property.
EXPERT OPINION: “I would recommend that brokers always offer Flood Insurance to their clients. Just because a property is or is not located in a 100-year flood zone does not mean it is free of flood exposure. This is where Burns & Wilcox can bring significant value. We are here to consult with brokers — whether it is providing insight into a property’s flood risk or helping interpret coverage forms.”
