Industry Issues | Surplus Lines Reform

NAIC Market Conduct Annual Statement (MCAS) on Private Flood

To: Members Interested in Private Flood Insurance:

The NAIC has been considering what to include as part of their Market Conduct Annual Statement (MCAS) instructions with regard to private flood insurance and what data is contained in the newly added annual statement line (2.5) that was required beginning with the 2016 annual statement. Federal Flood (written through the NFIP) is reported on line 2.3 of the annual statement.

In July of 2017, the NAIC determined that they would like to have more information about this market, particularly from surplus lines insurers, writing private flood insurance. They've talked about including a number of requirements in the "interrogatories" that would accompany the annual statement for private flood. This has also led to a call from the consumer groups as interested parties at the NAIC to include a request for a significant amount of information.

We believe that the reporting that should be attributed to the statutory line of business (private flood 2.5) should not require any more data than that of other lines of insurance contained in the "allied lines" section 2.0.  Due to the interest in this expanding marketplace and the interest by regulators and consumer groups, the NAIC has requested that we survey our members WRITING PRIVATE FLOOD INSURANCE - or who are interested in potentially writing private flood insurance, to provide us with comments on the proposed interrogatory questions. Accordingly, we would ask that you review the questions below and provide your input regarding each one - and any reasons you/your company believes that the questions are appropriate or inappropriate.  We will aggregate the results and provide the information to the NAIC.

Please review and respond to  David.Snyder@pciaa.net and Donald.Griffin@pciaa.net no later than close-of business on Tuesday, September 18, 2018.

Thanks in advance for your prompt response.

Proposed Interrogatories

  1. Do you write private flood for residential dwelling risks, commercial risks or both?  Private flood includes coverage for the peril of flood that is not placed or underwritten in the National Flood Insurance Program (NFIP).
  2. If you answered "no" to question #1 - stop, you are done.
  3. If you write private flood risks, how do offer coverage -- select all that apply:

a.     Primary coverage on a separate policy?

b.     Excess coverage (over the maximum limits available under the NFIP) on a separate policy?

c.     Primary coverage as an endorsement to another policy?

d.     Excess coverage as an endorsement to another policy?

e.     Other private flood products?

  1. If your answered yes to any part of question #3 (e.g. you write private flood and/or excess coverage on a separate policy or as an endorsement), can you provide any of the following information, by category  from your data systems, separately for commercial or residential dwelling risks:

         a.     Premium
         b.     Exposures

         c.     Claims filed
         d.     Claims closed

         e.     Average number of days from claim opening to close

         f.     Complaints received directly by the company (not through the insurance department)

         g.     Lawsuits filed or settled

  1. If the data above is not available in your system, what data can be provided and how is it segmented?

Again, thanks for your input!