State Farm recently announced that they are ending their participation in the National Flood Insurance Program (NFIP), effective October 1, 2010.
Many flood policies currently written by State Farm agents are serviced by State Farm under arrangement through the “Write Your Own” (WYO) Program. During the 12-month period beginning October 1, 2010 those policies will be converted to the NFIP Direct Program. These policyholders will not see a disruption in their service, but will receive a renewal offer from the NFIP Direct Program instead of State Farm.
The NFIP Direct Program is operated by the Federal Emergency Management Agency (FEMA) for insurance agencies that do not have an established relationship with a WYO Company. State Farm agents will still be able to service their current customers and write flood coverage for customers by submitting applications directly to the NFIP Direct Program, essentially acting as a guiding light in the process. However, any claims under the NFIP Direct Program will be processed by the adjusters contracted by the NFIP Direct Program and not State Farm adjusters.
State Farm agents will have to enroll with NFIP Direct in order to remain the agent of record on policies transferred to NFIP Direct and to write new flood business through NFIP Direct. They will have to use a different policy processing platform with NFIP Direct. If an agent chooses not to sign up with NFIP Direct, their policies will non renew and the customer will be asked to select a new agency.
State Farm has communicated to their agencies and the media that the many NFIP reauthorization delays have challenged their ability to service all its customers’ needs. Since State Farm currently handles all processing of NFIP policies, from application submission to claims handling, these delays have had a greater impact on its operations than companies like Allstate that outsource those functions.
The rates and policies written through the WYO program and the NFIP program are identical. Allstate will continue to participate in the flood program going into the future. Be sure to contact or visit our Pawling, NY agency if you have any questions about flood insurance, or if you think your home is located in a flood plane.