Florida Insurer Launches Company Offering Admitted, Standalone Flood Coverage

A Florida-based homeowners insurer has beefed up its flood insurance offering with the launch of a new flood-coverage only company called TypTap.

The new company, a wholly owned subsidiary of Homeowners Choice Property & Casualty Insurance (HCI), one of the top writers of flood insurance in Florida, began operations on March 1 in Ocala after being licensed to offer standalone admitted flood coverage in the state on Jan. 15.

Paresh Patel, HCI Group chairman and CEO, said the timing is right to start the company, which he says is the first licensed flood insurer in Florida.

“As we are getting more expansive in our offering of flood policies it made sense to put it in a separate vehicle,” Patel said. “Because of the technology and the way TypTap works, it’s a different way of doing things than in the past.”

Patel said the coverage is sold through agents on the TypTap website. The online purchase process has been simplified through TypTap’s backend technology and only requires potential customers to answer three questions, then pick an agent from a dropdown menu to finish the policy purchasing process. The company is adding new agents all the time and those interested in being added can contact TypTap directly.

Current HCI customers can still add HCI’s current flood offering as an endorsement to their homeowners policy. Those who are not already HCI customers can now buy coverage through TypTap, just as they would do through the National Flood Insurance Program (NFIP).

However, Patel said the flood policies available with TypTap offers some key coverage differences, including offering replacement cost on contents, no 30-day waiting period, and no elevation certificate. The coverage also offers a loss of use component, which isn’t available through NFIP policies, and up to $500,000 on the building limit and up to $250,000 on replacement and contents with underwriting approval.

The current coverage targets middle-market homes with replacement costs between $250,000-$600,000. Average premiums for A and V flood zones are around $2,000.

Patel says for now, the coverage will just be available to homeowners in Florida but that it is “inevitable” it will be expanded to commercial properties and other states.

“We tend to find we are better suited for people who are seeing soaring premiums or people who have challenged elevation certificates,” Patel said.

He said agents like the set-up because they don’t need to be an expert on NFIP policies to offer a full suite of products to their customers. The company also doesn’t directly sell the coverage to customers – customers must pick an agent after completing the application online in order to purchase a policy.

Patel said HCI has tried to fill a need that he says exists for more competitively priced flood coverage in Florida, particularly since Biggert-Waters was passed and, as he put it, “scared the bejesus out of our policyholders.” The subject has been a contested one in Florida in recent months, with lawmakers and state regulators weighing in on how the state can address the cost issue.

“We have always taken the position that in Florida, NFIP has its pricing wrong and we are trying to see what we can do to protect people,” he said.

Related:

• FEMA Responds to Florida’s Flood Rate Request, Sort Of
• Florida Commissioner McCarty Says NFIP Rates May Be Unfairly Discriminatory
• Florida Lawmakers to Industry: We Want YOU to Join State Flood Insurance Market
• Flood, Fraud & the Florida Market: McCarty Talks Hot Insurance Topics in 2015
• Q&A: Florida Representative Backs Call for NFIP Transparency
• Understanding the Biggert-Waters Flood Insurance Reform Act of 2012
• How to Encourage Private Flood Insurance; Why Delaying Biggert-Waters Is Not the Answer
• Private Market Could Grow As Government Flood Insurance Prices Rise: Fitch
• Florida Private Flood Bill Now Law But Market May Take a While to Develop
• Is Private Market an Option for Florida Flood Insurance?