This year I’ve been privileged with the opportunity to attend the 2019 National Flood Conference in Washington D.C. The National Flood Conference is a three-day annual event for flood insurance industry professionals, and various other professionals whose industries overlap in some way with flood insurance (think mortgage lenders, insurance agents, mold remediators, attorneys, etc.). Over the course of the next few days I will provide day-by-day recaps of my experience at the National Flood Conference with my thoughts, opinions, and interesting things I’ve learned.
As a preliminary matter, I want to relay that there are a lot of nice people at this conference – friendly people, experienced people, and professional people. My gripe, as a policyholders’ advocate and attorney, is this conference – the National Flood Insurance Conference – is akin to a business conference with little focus on the people whose lives were affected and property was ruined by flood damage. Moving forward for future years, I think it would be beneficial if the National Flood Conference includes at least one panel with speakers who represent aggrieved policyholders and flood victims. That kind of dialogue and exchange would be priceless for everyone involved.
For clarity, I will use a few acronyms throughout this blog including:
- NFC for National Flood Conference
- •NFIP for National Flood Insurance Program
- WYO for Write-Your-Own Insurance Companies (i.e., companies like Allstate, Farmers, etc., who issue NFIP flood insurance policies)
Without further ado, here’s my Day 1 recap:
Day 1 – There are a lot of people here! Must be nearly 1,000 various flood insurance professionals and the likes. The Welcome Session started with a bang, with a large ballroom filled and over-flowing with people. There are a lot of event “sponsors” here, including the adjusting companies, engineer firms, law firms, and others who are considered “industry partners” (a term commonly used throughout the Conference).
Beyond welcoming remarks there was a discussion on “Antitrust Compliance Reminders” emphasizing the importance of not video-recording the panels and discussions, among various other rules.
Next up, was “Building Foundations for a New NFIP” where David Maurstad (who is FEMA’s Deputy Administrator for Insurance and Mitigation) discussed general statistics and improvements made throughout the NFIP sect of FEMA, and upcoming changes for the NFIP. There is a lot of hype being generated for something called “Risk Rating 2.0,” which seems to be a new modernized FEMA/NFIP initiative that incorporates purportedly cutting-edge technology to rate insurance risks (i.e., properties).
9:00 am brought a very interesting presentation called “Surviving the Next Storm – The Sand Palace” by Dr. LeBron Lackey, whose home was made famous as one of the only fully standing intact properties on Mexico Beach Florida after Hurricane Michael’s destruction. Dr. Lackey, who is a radiologist by trade, discussed how he set out to build a home that exceeded code requirements to sustain the tests of weather and time. Dr. Lackey’s home was built above and beyond the building codes and regulations in his area – the local code required pilings 30 feet into the ground, but Dr. Lackey incorporated pilings 40 feet into the ground. Dr. Lackey emphasized that areas frequently hit with certain types of natural disasters must increase their building and code requirements to force people to build structures that will survive the storm. This issue hits close to home for me because this is such a huge issue where I live in Houston, Texas where lack of regulation and low building code/permit standards have led to severely increased flooding throughout the streets of Houston with nowhere for water to run-off, crumbling leaking homes made of low-quality stucco, and more.
The first roundtable panel was titled “NFIP Reform and Reauthorization? Where Do We Go From Here?” This panel included an executive from JP Morgan (a lender), a realtor, and an insurance company executive, and a State floodplain manager. Each panel member offered their unique perspective and insight on current issues with flood insurance, ideas for reform, and otherwise.
A common issue mentioned by several of these panel members, which I similarly find of importance, is the need for more diverse types and amounts of flood insurance coverage. There was a discussion regarding how the current NFIP / WYO flood insurance policies only offer policy limits of $250k for homes and $500k/building for commercial properties, which is frequently not near sufficient to cover those eligible properties.
There was a debate amongst panel members as to whether the NFIP needs more reform now, or whether Congress should carte blanche reauthorize the NFIP for another 10 years without making any changes or reforms to the program. Many panel members agreed that a simple resolution is that flood should be included as a covered peril under normal homeowners or commercial property insurance coverage, the same as fire, hail, etc.
In my opinion, that seems like a very practical resolution that resolves many of the pressing issues with the NFIP and its quest for reauthorization.
Another notion that many seemed on board with is a push towards enabling policyholder to mitigate through reform and steps such as increasing the Increased Cost of Compliance amount from $30k to $60k, and applying it on top of the limits otherwise, rather than as part of the limits otherwise in the same pool.
The next session called “State of the US Private Flood Insurance Market” told us what we largely already knew – private flood insurance is almost always better than NFIP. The private flood insurance market is better at reaching consumers and have stronger resources to devote to marketing and spreading the word about the necessity of coverage. Further, the private flood market offers significantly more expansive and comprehensive flood insurance coverage tailored to each policyholder and consumer’s particular needs.
The private market flood insurance panelists indicated there is a huge opportunity for growth of the private sector of flood insurance, one even quoting a prominent financial analyst stating that the private flood market is the largest opportunity in the US with 17% increases/gains from year to year, and current occupancy of only 4% of the market share compared to NFIP/WYO policies.
Ultimately, the message was clear and consistent – the NFIP policy is not adequate at providing sufficient coverage.
I believe that much of the anticipated or sought reforms (as mentioned in the earlier seminar) are resolved and addressed through private flood insurance, which is regulated under state law rather than NFIP federal law.
During the afternoon part of Day 1, there were several workshops/seminars running concurrently, and this recap is solely based on those that I attended.
I chose to spend my time primarily on those courses that focused on Claims Handling and Legal Matters, which are directly relevant to me, but there were additional seminars on regulatory issues, ratings, NFIP history, and lenders issues that ran concurrently and I could not attend – I haven’t yet figured out how to be in two places at once.
“Building a Solid NFIP Claims Foundation: One Customer at a Time” was a big disappointment and in my opinion, truly a missed opportunity. The panelists were FEMA/FIMA personnel, and insurance professionals. Next year I think this course would be more beneficial by including a policyholder attorney who regularly represents flood insurance policyholders.
My final take on this class was that it was intended for insurance adjusters and others who work directly with policyholders (rather than agents, underwriters, lenders, etc.). There were some good messages relayed, including the importance of communication with the policyholders from the outset and knowing the resources and outlets to refer people to; the importance of being proactive on a claim and knowledgeable on the FEMA Bulletins and Memorandum.
However, something that rubbed me the wrong way is that FEMA professionals were seemingly making a mockery out of all of the information that policyholders are supposed to know, and the steps they are supposed to take when dealing with a flood claim/loss. Steps required per the policy including:
- “Separating the damaged and undamaged property, putting it in the best possible order so that we may examine it;”
- “Prepare an inventory of damaged property showing the quantity, description, actual cash value, and amount of loss. Attach all bills, receipts, and related documents.”
Among others. Throughout all of this, I couldn’t help but think that they have lost sight of the average American property owner who has just faced possibly the most devastating event of their life. They reiterated how almost no policyholders actually know these things, much less do them, and in my opinion, rather than talking about what the policy should know but doesn’t, they should have focused their time on discussing ideas to better educate the policyholders.
The last part of that seminar was devoted to FEMA bragging on itself about how its being “proactive” by partnering with WYOs and their agents on “a year-round marketing campaign” to get more people signed up with flood insurance. Seems to be pushing the cart before the horse in my opinion, and further, strikes me as highly odd because FEMA is supposed to be the government and unable to make a profit – talk about choosing the bottom line over peoples’ lives. Nonetheless, the message was clear that FEMA, the WYO insurance companies, and the adjusters are partners in this, theyre all in it together.
The last discussion of Day 1 that I attended was the “NFIP Legal Issues Panel” that included FEMA’s General Counsel, Jordan Fried, as well as two WYO/NFIP insurance defense attorneys. FEMA’s Counsel Mr. Fried spoke first, and the majority of his discussion focused on the panel of judges and attorneys that he was part of, along with Merlin Law Group attorney Rene Sigman, to develop Joint Initial Discovery Protocols and Procedures to be used to effectuate early resolution in litigation of flood insurance and other property insurance and disaster cases. Mr. Fried discussed how these protocols were debated and worked on by a group of attorneys, and he is very excited about them. FEMA fully endorses the use of these protocols in NFIP litigation.
The next part of the legal discussion was an update on the NFIP case law that has come out across the country over the past year. There were somewhere between 10-15 cases discussed, and ultimately there was nothing too monumental or noteworthy as far as changes or surprising opinions.
Most of the case law discussed was cases where the policyholder/plaintiff was pro se (representing themselves, or at least trying to), and in almost every circumstance the case was dismissed because the policyholders did not comply with the law in one of many ways.
The important lesson to relay/learn there is that it is almost never a good idea to represent yourself, even if you are an attorney. When in litigation, having an attorney who is both knowledgeable and experienced in flood insurance law—like many of us are at Merlin Law Group—is always recommended to help guide and advise policyholders of their rights.
After the legal seminar there was a meet & greet happy hour where I met and spoke for some time with Russ Tinsley who is with FEMA’s NFIP Appeals Department. Russ has been with FEMA for well over 10 years and has been in the insurance industry for much longer than that. It was a pleasure for me to get to speak with him – we discussed different steps that we can all take to bridge the gap and get these claims resolved better and faster for flood victims.
That’s all for Day 1, and that’s the short version! Tune in more tomorrow for my recap on Day 2!