In concert with growing more competitive, the private flood market also was far less profitable in 2017 than it had been in 2016. States seeing the most rapid improvement in their market concentrations were New Hampshire, Illinois, Colorado, Missouri and Washington, each of which improved their HHIs by more than 3,000 points from 2016. In 2017, by contrast, there were 20 states that fell in the “moderately concentrated” range and one (Alabama, with an HHI of 1,484.4) whose score indicates a competitive market. In 2016, every state but one (New York, with an HHI of 2,471.4) had private flood markets that fell in the “highly concentrated” range. Taken as a whole, the nationwide HHI of the private flood insurance market improved from 3,438.4 to 2,266.4, thus moving from “highly concentrated” to just “moderately concentrated.” But the improvement is even more impressive at the state level. The DOJ and FTC generally consider markets in which the HHI is between 1,500 and 2,500 points to be “moderately concentrated,” while those in excess of 2,500 points are “highly concentrated.” Justice Department (DOJ) and the Federal Trade Commission (FTC) use the HHI, calculated by summing the squares of the market-share totals of every firm in the market, to assess the degree to which markets are subject to monopolistic concentration. Not only is the private flood insurance market getting bigger, but it’s also growing more competitive, as measured by the Herfindahl-Hirschman Index (HHI). On a percentage basis, the private market grew rapidly from a relatively small base in a number of states, including five where 2017 premiums more than doubled the 2016 total. The largest markets tended also show the most growth on a premium dollar basis. Private flood premiums grew by at least double-digits in 2017 in every state but Maine, where the market actually declined by 3.9 percent from 2016. It was already the largest market for the NFIP. Florida, which created an innovative regulatory framework for standalone flood coverage in 2014 and built on that framework in 2017, surpassed California last year to become the largest market for private flood insurance. The figures include both residential and commercial policies, and coverage written in both the admitted and excess and surplus lines markets.īecause the NAIC only began collecting data on private flood in 2016, this year’s figures offer the first opportunity to compare how the still nascent market is developing on a year-to-year basis. The S&P data stem from statutory filings made to state regulators and the National Association of Insurance Commissioners. Senate has yet to take up legislation to reform and extend the program, whose statutory authorization will expire March 23 without further action by Congress. The measure also would remove mandatory purchase requirements for commercial properties and deny NFIP coverage for extreme repetitive loss properties whose owners refuse to implement flood-mitigation measures. House in November, deference would be given to state insurance regulators to determine which privately underwritten policies are comparable to NFIP coverage for purposes of federal lending regulations. The news comes as Congress continues to mull reforms to the NFIP that could clear the way for a bigger private market role in the nation’s flood preparedness system. By contrast, the NFIP had $3.57 billion of in-force premium as of January. There was $623.8 million of private flood insurance written in 2017, up from $412.6 million in 2016. market for privately written flood insurance grew by 51.2 percent last year, with state-level markets growing both more competitive and less profitable, according to 2017 statutory insurance filings compiled by S&P Global Market Intelligence.Ĭomparing S&P’s data with the National Flood Insurance Program’s written premium in force, as reported in January 2018 by the Federal Emergency Management Agency, private cover now represents nearly 15 percent of all flood premiums nationwide.
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