The Path to More Affordable Flood Coverage

FloodGuard

Prospect General was formed with the goal of collaborating with partner agents to develop innovative insurance products preferred by policyholders.

Early on, when meeting with a select group of producers, we immediately realized there was an opportunity to improve flood insurance in California. So we set up a formal marketing survey, and reached out to potential customers to learn more about what pain-points they faced when purchasing flood coverage.

What we learned was that there was (1) a lack of coverage options, (2) expensive elevation certificate requirements, and (3) typically a 30-day waiting period (the time before your policy becomes effective).

We figured, there must be a better way of doing business.

One of the biggest inefficiencies with the National Flood Insurance Program (NFIP) we realized was the lack of pricing segmentation.  Nationwide, there are only a handful of unique pricing “zones.” This general pricing methodology means that some insureds are charged an unnecessarily higher price for flood insurance than their home warrants.  Essentially, low-risk flood consumers are subsidizing coverage for high-risk flood consumers!  Moreover, some of the zones are based on outdated maps, or worse, subject to political maneuvering.

If Prospect General could figure out how to affordably price a home based on its location, then a viable alternative to the NFIP was truly possible! So, Prospect General, and Palomar Specialty Insurance Company – our sister company and a leader in catastrophe insurance – spent the better portion of 2016 researching the advancement of catastrophe models for the peril of Flood.

What we found was a comprehensive and probabilistic inland flood model for the United States developed by AIR Worldwide. Leveraging over 650,000 random flood events, and calibrated against the National Flood Insurance Program (NFIP) loss experience, the AIR Inland Flood Model was the only flood model that Palomar and Prospect General trusted.

Using the AIR flood model, we were then able to develop a highly-granular proprietary rating system that charged for flood insurance more fairly, and a simple and easy-to-use front-end user interface for partner agents.

In January 2017, the California Department of Insurance (DOI) approved our innovative approach to flood insurance, making Flood Guard the first ever such flood product approved by the California DOI.

Now, we are excited to share Flood Guard with you, our producers and customers! Get a quote and bind affordable flood coverage in minutes via our Online Policy Issuance System, PASS.

Not appointed? Don’t worry. Reach out to us at Producers@ProspectGeneral.com.