Everyone in the insurance industry knows that the National Flood Insurance Program is on its deathbed, notwithstanding the recently passed extension, and many are prepared to step in. Insurers are already approved to write flood policies.

Executive Summary

As insurers dive head first into the private flood insurance market, are they ready for the flipside of a revenue surge—a flood of new lawsuits made more likely by one-way attorney fee statutes in a state like Florida, where private insurers also have been dealing with the AOB crisis? Attorney Jason Wolf advises insurers to anticipate the oncoming flood of flood litigation by marrying their legal teams with their claims-handling units and through simple practices like clear and active communications with insureds.

While the number of flood policies written by private insurers is an infinitesimal part of the overall private market today, carriers are salivating at the potential revenue. After all, published reports predict that flood insurance is a $40 billion market, once the private market is firmly entrenched.

This revenue surge will not be without its drawbacks. Namely, lawsuits will increase dramatically, once the public adjuster community and the trial lawyers who steer anti-business litigation realize what they have on their hands. In fact, we can be sure that somewhere, a savvy plaintiffs’ property insurance lawyer is monitoring flood insurance policy data from regulators, waiting until the number of policies in-force reaches critical mass before pouncing with an aggressive advertising campaign.

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