What is the NFIP?
The National Flood Insurance Program, or NFIP, is the insurance arm of the Federal Emergency Management Agency (FEMA). The NIFP was created in conjunction with the National Flood Insurance Act of 1968 following the devastation of Hurricane Betsy. Flood losses tend to be the most costly and widespread flood damage was crippling the era’s private insurance companies. Because insurers weren’t able to offer cost-effective flood coverage, the NFIP was created to maintain a large enough pool of funds to pay for such events. Even today, most standard homeowners policies do not offer flood insurance because it is simply too big a risk for insurance carriers.
Following Hurricane Harvey, the average NFIP claim payment was $110,000 on average. While participation in the program is typically elective, homeowners in high-risk zones are required to purchase it.
Why should independent adjusters get certified by the NFIP?
While most claims throughout a normal year are not flood-related, those that are usually cause considerable damage. Out of over 670,000 claims caused by Hurricane Harvey in Texas, roughly 91,000 were NFIP flood claims, totaling over $8.5 billion in payouts. Those claims could only be handled by NFIP certified adjusters. During the 2017 peak of hurricane season, the demand for flood certified claims adjusters skyrocketed, but the supply of available and certified adjusters was incredibly low.
Because the NFIP works differently than most other types of insurance, they have different requirements for those who work with and handle claims, including adjusters. The NFIP Bureau and Statistical Agent keeps a database of all NFIP certified independent adjusters and their authorization numbers, and these folks are the only adjusters qualified to handle these claims.
NFIP Certification Requirements
The application for NFIP authorization is split into 5 sections: Residential (Dwelling), Manufactured (Mobile) Home/Travel Trailer, Small Commercial (General Property), Large Commercial (General Property), and Condominium (RCBAP). The requirements for certification are broken down into two general groups.
According to FEMA, to be approved for Residential, Commercial, or Manufactured (Mobile) Homes losses, or any combination thereof, an adjuster must:
- Have at least 4 consecutive years of full-time property loss adjusting experience.
- Be capable of preparing an accurate scope of damage and dollar estimate to $50,000 for manufactured (mobile) homes and to $500,000 for residential and commercial losses.
- Have attended an NFIP workshop and be able to demonstrate knowledge of the SFIP and of NFIP adjustment criteria for all policy forms.
- Be familiar with manufactured (mobile) home and Increased Cost of Compliance adjusting techniques.
To be approved for Large Commercial or RCBAP losses, or both, an adjuster must:
- Have at least 5 consecutive years of full-time large-loss property adjusting experience.
- Be capable of preparing an accurate scope of damage and dollar estimate of $500,000 or more.
- Submit written recommendations from three insurance company supervisory or claim management personnel. The recommendations must reflect adjusting experience only.
- Provide information regarding current Errors and Omissions coverage.
See full requirement details on the FEMA Website.
What if I’m a new adjuster?
Although these requirements may seem daunting to new adjusters, the shortage of flood certified adjusters means it is well worth your time to get certified if possible. There are a few ways to go about obtaining certification. Pilot Catastrophe, Crawford, and Worley, among others, offer flood certification mentorship programs or workshops for licensed adjusters that are recognized by the NFIP. Some companies offer an approved 2-day flood policy certification course, but Pilot takes it further by offering additional courses, including 3 days of flood-specific Xactimate training and 5 days of flood claim handling at their facility.
To be eligible for their flood mentorship programs, you must have an adjuster license and apply to be on their rosters. Once accepted, you’ll be able to see training dates on their respective portals. To apply for an independent flood certification number (FCN) outside of the mentorship program, you will need to meet the 4-year minimum.
A note from AdjusterPro
Candidly, the lack of opportunity to become NFIP certified can be a challenge for independent adjusters. The new FEMA approved trainings offered by IA Firms are a step in the right direction but more is needed to get enough adjusters certified to handle events like Hurricane Harvey and Hurricane Florence. FEMA has recently started adding more online courses but according to their website:
“Adjusters seeking to become certified must attend the presentation and apply for certification with the NFIP Bureau and Statistical Agent (BSA). There are currently no NFIP Claims Adjuster Certification Presentations scheduled.
NFIP offers several free online courses that cover basic and specialized claims topics, as well as courses in general flood insurance topics which may be of interest to claims adjusters. At present, the online courses do not fulfill any requirement for certification through the NFIP. Future certification processes and requirements (beyond 2016) are likely to change as the Program transitions from in-person to online adjuster presentations.”
So we seem to be in a sort of limbo. FEMA hasn’t fully transitioned to online NFIP certification but they also aren’t regularly offering in-person certification workshops for adjusters either. The fact that NFIP claims are becoming more and more prevalent puts today’s claims adjusters in a difficult position.
Our recommendation? If you have the opportunity to obtain your NFIP Flood Adjuster Certification, take it. It will be well worth your time.