By Paul Lavenhar
New Jersey is known for Bruce Springsteen, diners, and going “down the shore.” It is also known for being one of the states hit hardest by Hurricanes Irene and Sandy.
New Jersey-based insurance agency, The Van Dyk Group, is located on the coast of New Jersey, and it processed over 6,000 claims after Sandy. Its staff also provided tremendous community support to help those whose homes were lost or damaged. The year before New Jersey was pounded by Hurricane Irene, which was a less powerful storm but still devastating.
Out of that experience Jeff Wyrsch, vice president of personal insurance for Van Dyk, realized there was a need for private flood insurance as an alternative to the National Flood Insurance Program (NFIP).
“Hurricane Irene hit our office on Long Beach Island, New Jersey. Irene caused inland flooding with lakes and rivers overflowing causing mostly inland damage. It was a completely different event than Sandy one year later. Sandy was a much more coastal weather event causing most of its damage along the shore. So, we got to see both sides of the need for flood insurance and catastrophe insurance,” said Jeff.
After these events, Jeff Wyrsch and his father David Sr. attended the first CHART conference. Although they had a previous Lloyds connection from years ago, they met with several syndicates and met a new broker. Working with CHART also eventually led to them going through the process to become coverholders.
After Jeff attended the CHART conference, he connected with a Lloyds of London broker who understood the need and the marketing potential for Van Dyk’s private flood insurance product. The next step was a trip to the London market to finalize the product offering.
“Attending CHART led to our being with Iris Insurance Brokers. After CHART we had several meetings, and our broker introduced us to various syndicates. We came away feeling very confident that there was real interest in our product,” said Jeff. “Afterwards we put together a proposal that showed how the product and its rating would work.”
After meeting with the Lloyds underwriters in London, these underwriters followed up by coming to New Jersey to meet with Van Dyk executives. They saw first-hand the type of properties and risks that the program targets.
“Since Sandy, many federal regulations for flood insurance have changed and continue to change in regards to elevation requirements of homes in high risk flood zones, along with how their premiums are calculated. Our initial program focuses on properly elevated homes, which have lower risk and lower premiums, but high volume. Most other private programs do not take elevation into account. New homes and those rebuilt after Sandy have to meet new elevation requirements, which meet the criteria for our product’s coverage and lower rates,” said Jeff.
Van Dyk’s flood products not only provide lower premiums, but also offer additional coverage options beyond what NFIP offers. These private flood products meet all federal requirements and are typically accepted by mortgage companies.
One impetus for the product was rising NFIP premiums – in extreme cases doubling or tripling in a year. In addition, many home owners hit by Sandy were disappointed to find out their coverage would not cover their home’s total value.
Van Dyk’s program can provide replacement cost coverage on personal property. In contrast to NFIP that limits coverage to $250,000 for the building and $100,000 for personal property, Van Dyk provides up to a million dollars for the building and up to $250,000 in personal property coverage on their standard policy.
Many of the homes damaged by Sandy were second vacation homes – often rented when unoccupied by the owners. Van Dyk can cover replacement cost, lost income if it is unrentable, and the cost to live elsewhere while a home is being repaired, which NFIP does not. In addition, NFIP has additional fees for vacation homeowners, which the Van Dyk flood program does not.
Van Dyk continues to offer NFIP coverage in addition to its own product. Its ability to offer an alternative enables its customers to customize their coverage depending on their specific needs.
Van Dyk launched the program by offering it to its existing base of customers. Based on getting a positive response, Wyrsch’s plans for 2018 include offering the product on a wholesale basis to agents in coastal areas in the northeast. In addition, Van Dyk launched a coverholder operation called Insurance Agency Connection.
“When we found out about the CHART conference, we were looking for connections with the London market. We decided to give it a shot even though we had prior relationship there years ago. We came away from the conference with a lot of good information. The biggest advantage that CHART offered us was the opportunity to meet with Lloyds’ brokers. While we were at CHART we met with several syndicates and with Iris, the firm that ultimately became our broker. That led to our becoming coverholders and launching our product,” said Jeff.
Paul Lavenhar is the principal of the insurance marketing communications firm
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