5 Steps to Better Manage Insurance Risk

During the National Flood Association's December webinar, Navigating the Ever-Changing Flood Industry Requirements and Regulations, David Wolter of Newmark shared some startling statistics. During the 2024 hurricane season, over 300,000 structures were affected by storm and flood damage—200,000 of which were estimated to have been uninsured.

That is a staggering number. When it comes to managing the risk of uninsured and underinsured properties, lenders need a comprehensive risk tracking and mitigation strategy.

The experts at AFR Services are here to help with five steps to reduce financial risk, ensure compliance, and protect both borrower and lender interests against uninsured or underinsured losses.

1. Require Adequate Coverage at Origination

You already know that borrowers must have insurance coverage that meets your requirements, including hazard and flood insurance. However, did you know that inaccurate flood zone determinations could dramatically impact this process?

🔗 Learn more about the cause and cost of inaccuracy.

2. Implement a Robust Tracking System

There are multiple ways to accomplish this, including using internal resources or outsourcing to an insurance tracking or lender-placed insurance company.

🔗 Discover how to transfer risk, retain control, and manage borrower impact.

3. Establish a Lender-Placed Insurance Program

While it's crucial to have a policy in place for borrowers who fail to maintain required coverage, it's equally important to ensure that your tracking and lender-placed insurance programs remain compliant.

🔗 See how to avoid the pitfalls of portfolio insurance risk management.

4. Conduct Periodic Insurance Audits & Stay Compliant

• Perform random insurance compliance audits to identify coverage gaps.
• Request new flood zone determinations as needed to ensure your requirements align with a property's actual flood risk.
• Monitor federal and state compliance requirements for lender-placed insurance and borrower notifications.
• Use audits to ensure adherence to CFPB, NFIP, and state insurance regulations.

5. Partner with Insurance Experts

Collaborate with trusted industry leaders like AFR Services to:
✅ Manage your tracking system and lender-placed insurance programs
✅ Help borrowers secure adequate policies
✅ Ensure full compliance with insurance regulations

Lenders across the U.S. rely on AFR Services for the industry’s most accurate flood zone determinations, comprehensive insurance tracking technology, and compliant lender-placed insurance processes.

With over 30 years of risk management expertise, our clients count on us for reliable solutions and expert guidance. Take your insurance risk management to the next level—request a demo today!