Best's Review



At Large

Flood insurance and resilient building belong together.
  • Tony Kuczinski
  • September 2019
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By Tony Kuczinski

Tony Kuczinski

We don’t need to overcomplicate the basic premise of flood risk—if it can rain, it can flood.

The first half of 2019 might be remembered for having too much of a good thing ... too much rain. According to NASA data, June 2018 to May 2019 ranked as the soggiest 12-month period in the continental U.S. since modern record keeping began. All of this rain also created flooding of biblical proportions, devastating homes, businesses and, in some cases, entire communities.

Recent activities by the National Flood Insurance Program (NFIP) and the Federal Emergency Management Agency (FEMA), which oversees the NFIP, could create more certainty for homeowners who count on the NFIP for flood insurance.

In June, the House Financial Services Committee approved the NFIP Reauthorization Act of 2019 by a unanimous vote. Key provisions include a five-year extension and “continuous coverage” language that would allow policyholders to purchase a private flood insurance policy and return to the NFIP without being penalized. The bill also authorizes $500 million for mapping, requires FEMA to use updated mapping technologies and authorizes $200 million per year in pre-disaster mitigation funding.

FEMA announced in May that it will implement Risk Rating 2.0 for single-family homes starting in October 2020. Under Risk Rating 2.0, premium will be based upon several rating characteristics including the types of flood events the location is prone to, the distance a building is from the coast or another flooding source and the cost to rebuild a home.

FEMA has also released 50 million NFIP records containing data on flood claims and insurance policies since 1978. The data provides insurers and reinsurers with information needed to develop private market flood insurance solutions for individuals and businesses.

Previously, lending institutions required mortgage holders with property in a flood plain to purchase NFIP coverage. Under a new Federal rule, effective July 1, 2019, most private market flood insurance policies can be accepted by lending institutions in lieu of an NFIP policy. In addition, Write-Your-Own companies responsible for servicing NFIP flood policies can now offer competing private flood policies to buyers.

State governments are supporting these changes by easing regulatory processes to help make private flood insurance solutions readily available. For example, in Virginia, flood filings from insurers are being fast-tracked. On the reinsurance side, we've seen an uptick in opportunities as insurers seek new treaties that will enable them to write flood insurance.

Insurance and mitigation are keys to resilience. To achieve resilient communities, we need to increase the purchase of flood insurance and also focus on public-private partnerships and mitigation activities to improve existing infrastructure. Some cities are taking steps in that direction. For example, in April, the District of Columbia announced Resilient DC, a plan that includes retrofitting all flood-prone buildings by 2050.

The (re)insurance industry is currently using technology to better understand flood risk. New tools for geocoding accuracy, estimating first floor elevation and capturing aerial imagery can help predict a flood before a storm hits and settle claims more efficiently following an event.

We don't need to overcomplicate the basic premise of flood risk—if it can rain, it can flood. According to FEMA, the peril of flood has impacted 98% of U.S. counties. It's not a question of “if,” it's about “when.” If we want to create more resilient property owners and communities and, most importantly, save lives, we need to consider a suite of solutions to the flood challenge including insurance and pre-event mitigation.

Best’s Review contributor Tony Kuczinski is CEO of Munich Re, US. He can be reached at

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