As Federal Flood Insurance Rates Go Up A Popular Private Insurance Alternative Is Saving Consumers Millions

Buyers are opting for big savings with a private provider as the National Flood Insurance Program is being forced to raise its rates by double digits

Salt Lake City UT /PRNewswire/ - After the National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Administration (FEMA), initiates its next round of rate increases on April 1st, U.S. taxpayers, already on the hook for over $24B in flood losses, will continue to subsidize these higher rates. The new rates will increase FEMA/NFIP premiums by 15% to 18% for most consumers and as much as 25% for others. The rate increases will be accompanied by an additional flat surcharge ranging from $25.00 to $250.00per policy, which will cause the cost of flood insurance for some smaller policyholders to skyrocket by over 100%. This is the second of a series of rate increases expected to take place every year for the next 4 to 5 years. Fortunately, many flood insurance buyers have discovered that FEMA/NFIP is not their only option. Thousands of insurance professionals across the nation are offering their clients private flood insurance at lower rates and with better coverage options than FEMA/NFIP flood insurance.

The Natural Catastrophe Insurance Program (NCIP) was created by Poulton Associates, Inc. over eight years ago and has saved consumers millions of dollars on their flood insurance policies during that period of time. In fact, Poulton Associates has become the largest primary private flood insurance facility in the U.S. Its flood insurance products are available to properly licensed insurance professionals at www.catcoverage.com.

The NCIP should not be confused with private insurance companies who issue policies on behalf of FEMA/NFIP which are known as Write-Your-Own (WYO) insurers. These WYO insurers are often well-known insurance companies that write and service FEMA/NFIP policies under their own names for a part of the premiums. The NCIP is backed by Underwriters at Lloyd's, located in London, England.

According to federal court records and recent news reports, including an investigation aired by 60 Minutes earlier this month, overwhelming evidence has been presented that WYO's and FEMA/NFIP wrongly adjusted thousands of Superstorm Sandy flood insurance claims. Based on this and many other factors, insurance buyers have been turning to the NCIP in greater numbers.

As demonstrated by the raft of Sandy claims that have landed in federal court, FEMA/NFIP buyers are discovering that the NFIP lacks any effective oversight. Policy holders are forced to accept whatever the NFIP is willing to pay or face taking on the expense of litigation in a federal court. On the other hand, the NCIP is subject to oversight by individual state insurance commissioners who, at no charge, are very effective advocates for consumers when dealing with private insurance companies.

According to Craig Poulton, CEO of Poulton Associates Inc., the reason lower rates are available through the NCIP is that they use more "data points" than are used by FEMA/NFIP. According to Mr. Poulton, "When we evaluate the flood risk represented by any given location, we are able to take into account much more data about that location than the NFIP uses in its appraisal of flood risk. With more information available to us, we derive lower rates for many locations and that translates into savings for consumers."

Lower prices are not the only reason to take advantage of the NCIP private insurance option. Mr. Poulton also points out that the NCIP has numerous coverage features that make it more attractive than what is offered by the FEMA/NFIP. He said the definition of flood under the NFIP requires that at least two acres of ground or at least two homes be inundated by water, whereas the NCIP has no such limitations. There are also many other enhancements available through the NCIP, such as coverage for contents located in a basement; additional living expenses; protection against loss of business income; and a waiting period of only 15 days as opposed to 30 days under the NFIP. The NCIP also provides limits of coverage up to $5M compared to only$250,000 for homes and $500,000 for businesses under the NFIP. Other comparisons between the NCIP and the NFIP can be found at www.CatCoverage.com.

Since 2006, the NFIP has been on the Government Accountability Office's High Risk Report. In the 2015 report the GAO explains, "The losses already generated by NFIP, as well as the potential for future losses, have created substantial financial exposure for the federal government. In addition, weaknesses in management and program operations create risks that funds allocated to NFIP and premiums paid to the program are not being used efficiently or effectively." With this in mind, it is not hard to see why the privately backed NCIP is experiencing accelerated growth in its share ofthe United States flood insurance market.