Sales of flood insurance up sharply

Sales of federal flood insurance rose sharply across the country last year after homeowners witnessed the devastation wrought by Hurricane Katrina and realized that typical insurance policies didn’t cover many victims’ losses.

From November 2005 to November of last year, the number of federal policies jumped more than 13 percent, far more than normal, according to officials at the Federal Emergency Management Agency. Partici-pation in coastal and other vulnerable areas spiked dramatically. In Mississippi, the number of policies jumped 61 percent.

Strong increases were seen in northeastern and western states as well. Idaho had a 24 percent increase, and Rhode Island 21 percent.

“I would have to believe that very few people think their regular insurance program covers flood. You’d have to be living under a rock to still think that,” said Ted Kinney, of the Alabama Independent Agents Association.

The roughly 700,000 new policies will provide an injection of cash for the National Flood Insurance Program.

The program takes in $2 billion a year in premiums, but more than a third of that goes to debt payments.

The recent surge in policy purchases put the program over $1 trillion in liability, with some 5.4 million policies.

Along with Katrina, regional flooding in the northeast and elsewhere last year probably contributed to the spike, said an FEMA spokesman.

Some private insurers say they are finding renewed interest in flood insurance from wealthy homeowners.

“We are seeing very brisk interest,” said Mark Schussel, The Chubb Corp., a N.J.-based insurer that is expanding its flood coverage.

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