ACE USA, the U.S.-based retail operations of the ACE Group, today announced the release of a white paper exploring innovations in flood insurance protection brought to market since Superstorm Sandy made landfall in October, 2012. The new white paper, “Innovations in Flood Insurance Protection,” discusses the introduction of flood reinstatement coverage, which provides excess of loss insurance above the remaining limits of protection in the underlying property insurance policy.
Following the catastrophic losses of Superstorm Sandy, many businesses were unable to obtain additional coverage, or were forced to reinstate limits of existing policies at much higher cost, stricter coverage terms or substantial increases in deductibles. Since Superstorm Sandy, massive flooding has also devastated the cities of Calgary and Toronto in Canada, as well as Boulder, Colorado.
“In the aftermath of Superstorm Sandy, many corporate risk managers whose organizations had experienced a flood loss found their companies facing a new exposure — because the financial limits of their existing insurance policies were exhausted, they were responsible for additional financial losses in the event of another flood,” said Jeremiah Konz, Senior Vice President, ACE North American Property & Specialty Lines, and author of the new ACE white paper. “With flood reinstatement coverage now available, risk managers unable to acquire their customary policy limits at renewal have the option to buy coverage to build back or build additional high hazard flood limit for improved protection.”
Risk managers now have the option to buy additional standalone flood insurance if the current coverage is renewed with decreased limits or sub-limits, or if the high-hazard flood deductible in the primary program has dramatically increased. In effect, the insurance augments the limits remaining in the insured’s property insurance policy, even in cases where the limits have been completely exhausted. The coverage terms, conditions and premium charged are based on each insured’s high-hazard flooding exposures. Additionally, in cases where a company building may be financed through a bank, inadequate insurance coverage can reduce the chances of obtaining favorable loan terms, if not eliminate it in its entirety. Flood limit reinstatement insurance provides an additional layer of financial protection to prevent this.