NJM’s Flynn on preparing for hurricanes, future of flood insurance

Bernie Flynn, CEO of New Jersey Manufacturers Insurance at the company's headquarters in Ewing on Tuesday, April 29, 2014. Martin Griff / The Times of Trenton
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As New Jersey residents brace this week for the potential impact of Hurricane Jose, New Jersey Manufacturers CEO Bernie Flynn said his company is ready to handle any claims that are the result of the storm.

And New Jersey Manufacturers, he said, is ready for the potential hurricanes that could follow in the coming weeks.

It’s the future of the National Flood Insurance Program that worries Flynn.

Earlier this month, Congress voted to temporarily extend the NFIP to Dec. 8. It had been set to expire Sept. 30.

And, while Congress is certain to reauthorize the program, which was created in 1968, Flynn feels the time is right for not only a review but a long-term reworking of the arrangement.

“The flood insurance that the federal government provides is critically important to everyone who has any real risk of flooding,” Flynn said. “The concern is, what is going to happen to the flood program down the road? They just extended it three months, but they still have to determine what the long-term solution for the federal program is.

“That’s the big public policy question that’s going to have to be solved in Congress and with the Trump administration. For us here in Jersey, being a coastal state and having been hit by Sandy and other storms, it’s a very important issue.”

The issue, Flynn said, is not justifying the program, but simply paying for it.

The program, which used to be self-sustainable, is now more than $25 billion in debt. And that estimate came before the catastrophic flooding caused by Hurricane Harvey and Hurricane Irma.

When the nonpartisan Congressional Budget Office analyzed the program based on data on Aug. 31, 2016, it determined the NFIP will have a $1.4 billion annual shortfall.

Flynn said that needs to change.

“The new program needs to be sustainable,” he said. “And it needs to be determined whether this is truly a flood insurance program, or a disaster relief program.

“As a flood insurance program, quite frankly, in many cases, the rates are deficient and not sustainable. Right now, the flood program is more than $25 billion in debt. If it were an insurance company, it would have long ago become insolvent. So, Congress has to make a decision.”

The latest projections seem to indicate Hurricane Jose will not have a major impact on New Jersey this week. Flynn, however, said New Jersey Manufacturers will be ready for any scenario.

“We have constant vigilance during the hurricane season,” he said. “We have catastrophe teams that are ready on a moment’s notice.

“The only good thing about a hurricane that could hit New Jersey is that we get notice. Typically, at least a week’s notice. We have trusted vendor partners who are on call who are ready to take our call. We have a staff of 2,500 people. When a big storm hits, every one of our staff members is ready to support our policyholders who are in need.”

Flynn said it’s a result of recent storms, including Superstorm Sandy in 2012.

“During Sandy, in the couple of days of the aftermath, we were taking a 1,000 claim calls per hour for a couple of days. So, instead a staff of 30 handling the phones for what we call a first notice of loss, we had 400 people on the telephone handling the calls.”

Sandy, however, was not the event that served as a wakeup call for the company.

“In a strange way and a little serendipitous for us, we had a bad wind storm in North Jersey in March of 2010,” Flynn said. “That helped us realize we weren’t as prepared for a catastrophic event as we could have been.

“Then, in 2011, it was Hurricane Irene. And we were better in 2011 than we were in 2010. By 2012, our technology systems were up to speed, we had the extra staff ready trained to take phone calls or adjusting claims when it was all hands on deck. So, were able to manage during Sandy, when we received 57,000 claims just from one event. For a typical year before Sandy, we’d take 20,000 claims over the course of an entire year.”

Flynn saw the value of flood insurance in Sandy.

“So many people were without insurance,” he said. “And that’s where the real pain and sorrow came from. And some are still trying to recover from it. But if you had homeowners’ insurance and flood insurance, those folks have recovered for the most part.”

It’s why Flynn said he’s eager for the federal government to act.

But even if it does, Flynn said the unfortunate reality is many people who need the insurance will not get it — even after Sandy.

Flynn, in fact, said there hasn’t been an uptick in coverage since Sandy. If anything, he said, the event provided a fall sense of security.

“We think some of the psychology around that is, if people didn’t get flooded because of Sandy, they didn’t need the flood insurance,” he said. “And if the bank isn’t requiring you to pay flood insurance to pay your mortgage, you don’t have to buy it.”

Flynn wishes more people would.

“Flood insurance is a good value,” he said. “It is not designed to make the homeowner whole if a home is completely devastated by a flood, but it will get people back up on their feet.”