High-tech insurance firm enters Florida with aggressive growth plans

As Hurricane Ian blew through Southwest Florida late last year, there were the fears that always accompany a massive storm. Wind. Rain. Flooding.

But in the case of Ian, and what may be the future as we face the realities of climate change, it was the third of these that seemed to cause the greatest damage.

Across the area, as more than 100 mph winds pounded the coast and headed inland, a massive surge moved in, dislocating boats from their moors, sending cars floating down streets and pouring hundreds of thousands of gallons of water into homes and businesses.

According to a report from the National Oceanic & Atmospheric Administration, “a storm surge with inundation of an unprecedented 12 to 18 feet above ground level was reported along the Southwestern Florida coast, and the city of Fort Myers itself was hit particularly hard with a 7.26-foot surge — a record high.”

CoreLogic, the property information, analytics and data provider, says losses from the National Flood Insurance Program and private insurance companies are between $8 billion and $18 billion. Uninsured flood losses for the area are estimated to be between $10 billion and $17 billion.

What the flooding also did was expose a coverage gap where many Florida homeowners and businessowners did not have protections in the event of a flood. And even for those who did have coverage, the claims process became somewhat convoluted as some insurers fought over whether the damage to homes and businesses was caused by wind or flooding — with payment  based on which won the time-consuming argument.

Stepping into the fray, rather than running from it, is a London-based insurer which announced in January that it had launched a commercial flood insurance product in Florida and several other states that, it says, uses technology to simplify the claims process and a tried-and-true policy structure to make payouts predictable.

The company, FloodFlash, has hired a Naples executive to run its U.S. operations.

“For the last 15 years, I’ve worked for insurance companies, I’ve worked for insurance brokers, and I've worked in technology companies,” says Mark Hara, FloodFlash’s CEO of North America. “I’ve got a lot of experience bringing new products to market and getting them in the market. But, also, I look for how can I make an impact, helping people recover from floods. It’s a very traumatic experience.”

Hara previously worked for Bold Penguin and Mylo, companies that specialized in digital commercial insurance.

What it is

FloodFlash’s claim to fame, it says, is that it uses technology to both assess damage and to make the claims process work faster for its policy holders. According to a statement it released to announce its expansion, the company said it is goal is to pay a claim within 48 hours.

(The company says that on Nov. 22 it paid a client in full in under four hours.)

FloodFlash does this because it installs flood sensors in its commercial clients' buildings when they buy a policy. These sensors are placed at specific heights agreed to in advance. When a flood hits and reaches the sensor, it records how high the water has risen and sends a signal to the company that begins the payout process.

That’s the simple explanation.

The more technical description is FloodFlash combines Internet-of-things sensor technology, computer models and cloud software to create its flood coverage. 

Relying on technology, Hara says, helps speed the process along by shortening the number of steps needed to pay claims. That happens because the moment the sensor detects flooding, the communication between the insurance company and its commercial client begins. “The sensor enables our product, but it also acts as our claims department.”

Along with the use of technology, the way policies are structured simplifies a complicated insurance product.

The commercial policies FloodFlash writes are called parametric insurance policies Parametric insurance, which is sometimes called index-based insurance, is structured to pay a predetermined amount of money in the event of predetermined incident. Think of it as life insurance, Hara says. It’s a specific amount of coverage paid when a specific event occurs.

This, he says, takes much of the guesswork out of the claims process because once the flooding hits a specific height — verified by the sensors — the policy pays the amount of money specified at the beginning.

“We have a product that can help people quickly,” he says. “Because a lot of times you just need money for cleanup, or to help you keep the business open. Because, unfortunately, I've also seen a lot of businesses that we frequented close. And they'll never open again.”

How it came about

While FloodFlash may be new to the U.S., its founders and the technology they’ve developed aren’t.

Adam Rimmer, the chief executive, and Ian Bartholomew, the chief scientist, were part of a team that worked with the New York Metropolitan Transportation Authority to come up with a way to insure the organization after Hurricane Sandy flooded the subway system in 2012.  

(According to a city report, New York subways saw nearly 14 feet of water, more than half of that due to a storm surge.)

The MTA, at the time, was having a difficult time getting its flood insurance renewed. Rather than go the traditional route, the founders of FloodFlash say, the solution was to create a parametric policy that instead of paying out based on damage would pay $200 million if water rose above a certain depth in New York Harbor.

Rimmer and Bartholomew say in a statement on the company’s website that once the process was done, they “knew this form of insurance had a wider appeal than just those with the biggest budgets.”

FloodFlash was founded in 2019. Its expansion into the U.S. is fueled in part by a $15 million capital raise in Series A funding early last year. 

The company sees the U.S. as a lucrative market with plenty of growth potential. That’s because there are so many businesses underinsured for flood coverage. It says, “fewer than 5% of small to mid-size businesses carry flood insurance” in the U.S.

In addition to Florida, FloodFlash is expanding into Virginia, Texas, Louisiana, and California.

Hara won’t disclose revenue or sales projections.