NFIP Alternative Offered by Philadelphia Insurance

Philadelphia Insurance Cos. believes its models can provide better prices than the National Flood Insurance Program for some flood-related commercial property risks.

The Bala Cynwyd, Pa.-based member of the Tokio Marine Group is introducing a new commercial primary flood insurance policy as an alternative to businesses that might otherwise turn to the NFIP for coverage.

“The NFIP is restrictive in the terms and limits they can provide and their rates are driven by their models,” says Neal Schmidt, vice president of underwriting specialty property for Philadelphia Insurance. “We believe we can provide higher limits and better terms using our models.”

The NFIP limits coverage on a commercial building to $500,000. Schmidt says Philadelphia Insurance can offer coverage up to a limit of $5 million. Included in the policy is replacement cost coverage for building and contents.

“We will evaluate each property individually, which means we may be able to provide coverage to a business in a high-hazard flood zone,” he says.

The NFIP might price all policies in a high-risk flood zone the same. But, for instance, Schmidt says some properties on the outside edge of these zones can be insured.

Schmidt says Philadelphia Insurance is a supporter of the NFIP and interest in the product is not driven by the federal program's consistent threat of lapsing. Rather, clients are looking for “one-stop shopping” and more-accurate coverage terms rather than signing on with NFIP up to its limit and then trying to find excess coverage.

Philadelphia Insurance's sister company, WNC First Insurance Services is underwriting and administering the program. Tokio's Marine's specialist insurance and reinsurance group Kiln, of London, bought a 49 percent share of WNC a year ago.

WNC says it is in the largest administrator of flood insurance programs in the U.S. In 2010 WNC introduced a single-policy commercial flood program to combine building, contents and business interruption coverage in one package.