A few years back, I contributed anarticle (“TheCoastal Coverage Challenge, October 2008) to American Agent& Broker that outlined some of the numerous challengesagencies face in writing insurance in the coastal areas of the U.S.What has changed since then?

Keep in mind our agency is located on a barrier Island (LongBeach Island) off the coast of New Jersey. We took a direct hitfrom Superstorm Sandy on Oct. 29, 2012. A lot of the challenges andchanges we've had and continue to face are a direct result of Sandyand the devastation it caused.

We had suggested in 2008 that agencies break down the challengesthey face into three categories: differentiation, education andcommunication. These categories are still essential when an agencyis formulating its business plan to write coastal homeowner, floodand business insurance.

Related: Read “Power of the Package.”

Taking into account all the weather-related events over thesepast 5 years, we are going to keep these categories to incorporatelater. First, let's focus on three other concerns: availability,pricing and consumer knowledge.

Availability, or lack of it, has reared its ugly head forseveral years now. Since 2008, we have experienced a push away fromthe coast by most of the national and regional carriers. Most ifnot all have either cancelled all of their coastal business, orhave implemented stricter underwriting guidelines. In the coastalstates where we write business, most of the market is being handledby excess & surplus lines carriers.

Now we're seeing these E&S carriers tighten theirunderwriting guidelines. Availability is showing signs ofdecreasing with some carriers. Several have met their capacity andhave temporarily suspended new business. They are discussingdifferent deductibles for the future and possibly changing some ofthe availability for the highest risk properties on the oceanfrontor bayfront.

The National Flood Insurance Program (NFIP) has not yet changedinto restricting coverage, but there could be issues in the nearfuture about availability of flood insurance due to new buildingcodes, elevation requirements and pricing.

Pricing in general has been somewhat stable, but we believe thatis going to change dramatically in the near future. It would belogical to assume that these increases will not just be felt in thecoastal areas, but throughout the country. Natural catastrophesthroughout the world have become increasingly common over the pastfew years, and the U.S. has had more than its fair share, withhurricanes, floods, tornadoes and hail storms.

Related: Read “4 Sandy Lessons.”

Our E&S carriers have started to warn us about sizableincreases in homeowners' premiums as the year goes on. We havereceived increase notices as high as 50 percent to 100 percent,especially for condo policies along the shore. It would appear thatthe average increase will be at a minimum in the 20 percent to 25percent range for homeowners.

With the enactment of the Biggert-Waters Act last year, the costof flood insurance will certainly rise, in many cases dramatically.The removal of subsidies for pre-firm secondary buildings andbusinesses will increase these premiums 25 percent until thesetypes of properties are more in line with actuarial rates.

Add to that the devastation that Sandy left at the Jersey shore,and consumers are in a quandary about what to do to their damagedproperties and how the repairs may affect their flood insurancerates in the immediate future.

Our region has been left with thousands of substantially damagedhomes which must be demolished, raised or moved. The new AdvisoryBase Flood Elevations (ABFEs) have been posted by the FEMA/NFIP,but final enactment of these guidelines may not be available untilthis summer.

This leaves a lot of people without places to live year round,without their summer homes or without their summer rentals, whichthey need to pay their mortgages.

Rumors that have been circulating saying that people will bepaying $10,000, $20,000 or more for flood premiums are notwarranted. Although it makes a good story in the media, in realitythese types of increases will be rare if consumers would check thefacts.

This leads us to consumer knowledge and brings up two importantcategories from 2008: education and communication.

People are more hooked into social media today than they were in2008. Agents are a part of this, with many opportunities tocommunicate with anyone who has a computer or cell phone.

This means consumers are more aware of what is going on and canresearch any topic they want to know more about, includinginsurance for their homes and businesses.

But a little knowledge can be a disadvantage, as now consumersthink they know more than agents about insurance. That is why it ismore important than ever for agencies to communicate and educatetheir customers.

Social media options help agencies more than they did 5 yearsago, but they can't replace the everyday means of communicatingwith your clients with good old-fashioned customer service: pickingup the phone and talking to people, placing information “stuffers”with their policies, using newsletters to keep them up to date.

Your clients should hear about premium increases from you, noton TV, online, or worse, from a competitor. Your clients willalways welcome suggestions from you about keeping their premiumslower.

Since handling thousands of Sandy claims over the past 6 months,we find now is the perfect time to analyze your agency's claimhanding procedures. Honestly ask yourself and your staff how youwould handle hundreds or thousands of claims in a short period oftime.

Related: Read “Anticipate the Superstorm.”

Disasters are the times when your clients need you most. No onewants to lose a customer because of claims mishandling. The onlyway to prevent this is to prepare both your staff and your clientsfor the claims handling process.

Although a lot has changed since 2008, many of the challenges weface in writing coastal or any other insurance has remained thesame. It often seems like you have to go back to the basics to keepthings in perspective.

Keep your customer educated and informed and you will have acustomer for life.