AS HURRICANE MICHAEL LOOMS, A NEW PRIVATE FLOOD INSURER OFFERS COVERAGE TO HELP HOMEOWNERS

Hurricane Michael strengthened into a Category 4 storm early on Wednesday.
Homeowners in the path of the storm are expected to suffer catastrophic damage to their property.
The National Flood Insurance Program is the major provider of flood insurance in the U.S. but it is underwater by more than $20 billion and has borrowed roughly $40 billion from the government since Hurricane Katrina.
Technology-based start-ups like Neptune Flood are entering the private insurance market in an era of rising flood risks across coastal areas, using data analytics to lower the cost of coverage.
Edward McKinley, special to CNBC.com

Tropical Storm Michael is seen in the Gulf of Mexico in this NOAA GOES-East satellite image taken October 8, 2018.

Tropical Storm Michael is seen in the Gulf of Mexico in this NOAA GOES-East satellite image taken October 8, 2018.
With Hurricane Michael boring down on the Florida panhandle as a Category 4 storm with maximum sustained winds of 145 mph, market watchers are concerned about homeowners in its destructive path.

Ironically, the National Flood Insurance Program is underwater by more than $20 billion, and for many it’s an option that they rely on. Recognizing a niche with vast opportunity, start-ups like Neptune Flood are entering the market with a big-data approach to bring some much-needed competition to what critics within the industry consider a national disaster: the NFIP itself. The insurtech says its advanced mapping and remote sensing technologies allow it to better assess the risk of flooding and offer savings for consumers.

 

 

 

 

 

 

 

 

Floodwaters are seen surrounding homes after heavy rains from Hurricane Florence on September 20, 2018, in Lumberton, North Carolina.
Joe Raedle | Getty Images

Floodwaters are seen surrounding homes after heavy rains from Hurricane Florence on September 20, 2018, in Lumberton, North Carolina.
The National Flood Insurance Program was established in 1968. It’s a government-run program that fills the void in standard homeowners’ policies that may exclude storm surge and flooding that can cause catastrophic damage.

“Essentially, it’s Obamacare for flooding decades before Obamacare was created for health insurance,” said Robert Moore, a senior policy analyst with the Natural Resources Defense Council and expert in flooding in climate change.

The program creates flood maps to determine what homes around the country are at-risk for floods, it sets rules for building on the coast, and, perhaps most significantly, it requires flood insurance for anyone the government determines has at least a 1 percent chance of flooding in a given year and offers its own policies for sale. Any homeowner with a federally backed home mortgage is required to buy additional flood coverage if they are in a designated high-risk area, but it is optional for everyone else. As a result, many consumers are unprepared if a disaster strikes.

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