I’d like to change many things about the way the insurance industry manages flood risk but this one is one of my biggest bugbears... If a clients policy doesn’t cover them for flood then we need to make sure that they categorically know that this is the case.
Far too frequently clients will advise us that they’ve discovered that their insurance doesn’t cover them for flooding – unfortunately sometimes when their homes have filled with water.
Logic dictates that if an underwriter declines to offer flood cover that a client is likely to be at a greater risk of flooding than most, when this is the case there is an even greater need for insurance providers to ensure that they offer clients policies that cover them for flooding.
There are a number of scenarios that lead to a clients finding themselves in an uninsured position:
1. Providers may not have access to the right insurance markets – not everyone has the expertise and access to the right markets to be able to offer flood cover (and if that’s the case Flood Assist can help) resulting in the only option available being to offer cover excluding flood.
2. Buying through price comparison sites – key the details of a flood risk property in to any of the major comparison sites and you’ll find that the top of screen prices to the professional eye look too good to be true, and when you delve under the surface they are. A cheap rate can appear on a comparison site for a number of reasons including an insurer not understanding the property is at risk of flooding or more than alarmingly, because the policy doesn’t include cover for flooding. In the latter case it's only when the client clicks to buy the policy that they are either unable to proceed with the purchase or that when the policy is purchased the flood exclusion is hidden away in the small print never to be seen.
3. Online journeys – similarly as to price comparison sites its often not clear enough to a client that flood cover is excluded.
4. Policy renewal – with insurers continually improving their understanding of flood risk its not uncommon for flooding to be excluded at renewal or for restrictive terms to be applied to a policy in regards to flood, once again it’s often not clearly brought to a clients attention.
5. Consumer behaviour – whilst the onus is on the client to read their insurance documents and information presented to them (be it on or off screen) the reality is that many of them don’t (and lets face it, a typical welcome or renewal pack involves the felling of several trees these days).
The solutions to the above are pretty simple, most frequently involving good governance procedures and practices, yet so many providers fail to get the basics right.
It’s simple stuff and as insurance professionals it’s a fundamental thing that we should do correctly for our clients.