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Agents getting "flood smart," selling more through FEMA initiative New legislation brings changes to flood insurance program By Dave Willis
Everyone talks about trial by fire. But for Deb Shenberger, principal of Frenchtown, New Jersey-based Shenberger Insurance Services, her staff and customers, the bigger trial over the past year or so has been by water—flood waters, to be exact. First came the remnants of Hurricane Ivan, which wound its way up the East Coast of the United States after hammering Florida’s panhandle. Then, this spring, unusually heavy rains combined with melting snow, over-filled tributaries, and saturated grounds caused the Delaware River to overflow its banks for the second time in just eight months. “We had to help clients through some pretty tough times,” says Shenberger. While her agency has been writing flood insurance for years, the recent one-two punch was the first major flooding that her community had experienced in years. And the events were eye openers for many. “We all learned a lot in the past year,” Shenberger says. FloodSmart on the Web One of the resources she has used to complement this real-world learning is a new education and marketing program from FEMA (Federal Emergency Management Agency) called FloodSmart. Launched early last year, FloodSmart (www.floodsmart.gov) provides a comprehensive collection of information for consumers, insurance professionals and others. For agents, the program offers the opportunity to become a local FloodSmart agent. Among the benefits are a co-op advertising program, client referrals, and an exhaustive collection of flood and flood insurance materials. Shenberger has used some of the print materials, and her agency has received leads from the FloodSmart referral program. Additionally, she says, she’ll probably take advantage of the co-op advertising program, which offers up to 75% reimbursement for advertising costs. “We use some of the resources to make existing clients aware that flood insurance is available,” she says. That’s important in her area, where flooding is not an everyday—or even an every-year—occurrence. Tools she’s used include envelope stuffers that go along with homeowners policies and stickers that can be affixed to envelopes or policies to let customers know there is no flood coverage protection provided by a homeowners policy. The FloodSmart program helps agents understand flood plain maps and stay up to date on changes within their communities. It offers materials and preparedness checklists they can give to customers. And it provides information they can use as they speak to community groups and the local media about the importance of flood insurance protection. The site can help agents communicate not only with home owners, but with business owners and renters, as well. “Renters are a tough group,” she says. “They find it hard to believe that they should insure their property if they don’t own the house.” Two accounts Shenberger worked on during the summer were commercial clients—renters who were trying to decide if they wanted flood coverage. Her goal: to get the clients “flood smart,” before it’s too late. “People are resistant until a flood occurs,” she notes. “Then they are a lot more receptive.” Sales tool and more Fletcher Willey, owner of the Willey Agency in Nags Head, on North Carolina’s Outer Banks, deals with people all the time who’ve experienced floods. He uses the FloodSmart program and calls it a vast improvement over previous similar efforts. Willey, whose office is located in a hotbed of hurricane-related flooding, where 85% of county land is prone to flooding, doesn’t need to educate customers on the risks of flooding. But he does use the site to help influence sales. In fact, he taps it almost like an extra member of his office—or, at least, as an “always on” sales tool. “When I’m talking on the phone with a consumer and that person asks if I have any information on flood insurance, I say, ‘Okay, let’s look at FloodSmart.gov. I’ll hold while you bring up the site,’” Willey explains. Then he navigates through the site, with the caller on the other end of the line following along on his or her own computer screen. At the home page, he points to the three main categories—prepare, participate and protect—each of which offers different kinds of information. Willey frequently leads clients and prospects through the flood zones section, which describes what flood zones are, how to locate them, how to determine whether a specific property is in a flood zone, and what the risk is. Before long, he drills down to one of the “frequently asked questions” areas, and points customers to what is his favorite fact on the site. It says that structures located in high-risk flood areas have a 26% chance of suffering flood damage during the term of a 30-year mortgage, but just a 4% chance of sustaining a loss from fire. Willey can almost see the look on callers’ faces when they read that. “And everybody buys fire insurance,” he tells the caller. Somehow, closing a flood insurance sale becomes much easier after that. And for those who don’t buy, Willey pulls out a waiver—the ACORD 60 Form—which he requires clients to sign, confirming that they were offered, but rejected, the coverage. Frankly, Willey can’t understand why people would decline coverage in the first place, considering that, compared to the cost of a homeowners policy, for instance, flood coverage purchased through the National Flood Insurance Program (NFIP) is a relative bargain. New rules and regulations Agent education and awareness is particularly important now, given recent changes brought on by the Flood Insurance Reform Act of 2004. The law requires insurance companies that participate in the NFIP to provide clients with a summary of coverage. In addition, customers will get additional information about the National Flood Insurance Program, including a claims handbook and a history of flood losses that have occurred on their property, as contained in FEMA’s database. This is important for agents to know, Willey says. “If an agent writes a policy on a house that’s been around for, say, 15 years, within 30 to 60 days after the policy is issued, the home owner will get a letter from FEMA showing the loss history—any claims that have been made on the property and the dollar value of each,” he explains. “This has never been done before.” Willey says it’s something agents need to understand, and something their real estate friends and associates need to understand, as well. He is advising realtors in his area that they had better disclose the history because the buyer will find out soon enough. Online and live training courses are available to help agents increase understanding of flood and flood insurance issues, regardless of their familiarity—or lack of familiarity—with the National Flood Insurance Program and its features. (Visit www.fema.gov/nfip/wshops.shtm.) “It is an excellent way for an inexperienced agent to get some useful general knowledge on how to write flood policies,” Willey says. But it’s not just for newbies. “If you’re an agent who has insured a lot of properties, you can use this as a reminder—a way to go over the details that it’s sometimes easy to forget,” he adds. Changes brought about by the Flood Insurance Reform Act point to the need for agents—all agents—to become better informed when it comes to flood insurance and how it could affect their customers. Shenberger encourages agents to take five minutes and look at the site. “It’s full of information, easy to use, and just a good, all-around resource,” she says. “More and more clients are Internet savvy, so this makes it easy for agents to offer flood insurance information,” she says. “You just send people to the Web, they get the information online, and they come back as better-educated consumers, which makes the agent’s job easier.” * The author |
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