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Innovative Technology is Powering a New Wave of Data-Driven Flood Insurers

Rapid advances in data-driven technology and a precipitous rise in catastrophic flood events in the US presented an opportunity for this InsureTech startup

There are 62 Million homes at moderate or extreme risk of flooding in the US, according to insurance risk assessment firm Verisk.

Because excess flood insurance policies are rare and homeowners insurance typically does not cover flood damage, up to 50% of homes in high-risk areas have no protection in a catastrophe. This amounts to a serious problem, argues the founder of InsureTech startup Neptune Flood Insurance Jim Albert in this week’s episode of the Business of Data Podcast.

In the past, most flood insurance in the US was provided by the National Flood Insurance Program (NFIP). Now, powered by innovative technologies, nimble insurgent companies are shaking up the status quo.  

“The NFIP has done an exceptional job over the years, but as with most government programs, technology has started to outstrip what has happened within the flood space,” says Albert. “And so, what I tried to create with Neptune when I founded it in 2016 was an ‘Amazon-like’ buying experience in flood insurance.”

“You can get one-click buying for virtually everything else you do in life,” he continues. “So, we tried to make it easy to buy flood insurance in the US through the use of data analytics and a really simple online quoting platform.”

The game-changing, automated approach championed by Neptune Flood Insurance was not without its skeptics. In 2016 when the company was founded, the idea of digital insurance was even more revolutionary than it is today.

“There was a lot of skepticism about digital insurance [back then]. [Especially] when I explained that we don't have any underwriters.” Albert recalls. "In fact, the underwriter is the computer.”

What sets Neptune Flood Insurance apart from its competition is the speed that customers can get a quote and buy their flood insurance online.

We've proven in the model at this point,” Albert says. “We pull in about a hundred different data elements in one second when you enter the address, and we do the full evaluation right then and there.

The application of this technology could not be timelier. Not only are flood events likely to occur more often in the US, but due to the pandemic no-one wants to have an inspector in their home, nor to wait weeks for an estimate.

Do [customers] want to sign on to a days or weeks-long slog to finally get the information that they need?” Albert concludes. “Or, [do they] want to go to one site that has seemingly all the information with a really good price and great coverage options? That's what we see happening.”

Key Takeaways

  • Many homes at high risk of flooding in the US are uninsured. With flood risk affecting almost half of homes in the US, excess flood insurance is still relatively rare
  • Data has paved the way for a better solution.  By pulling together data from a multitude of sources, Neptune Flood Insurance can provide a policy in seconds  
  • Hyper-personalization is on the way. Other types of insurance companies will soon take advantage of advanced, data-driven technology to provide highly personalized policies to their customers