FIMA-NFIP_Background_and_Requirements_1_23_18_(003).pdf

NFIP Insurance Transformation Initiative: Background and Contract Requirements January, 23 2018

1. Background:

The Federal Insurance and Mitigation Administration (FIMA) is a component of the Department of Homeland Security (DHS), Federal Emergency Management Agency (FEMA), which operates the Risk Management and Flood Insurance Directorates and the National Flood Insurance Program (NFIP).

FEMA’s NFIP has been offering flood insurance coverage to homeowners, renters and businesses as protection against flood losses for almost fifty years. In return, local governments provide commitment to sound floodplain management and related flood disaster mitigation efforts. In addition to offering flood insurance, the duties of the NFIP include identifying communities’ flood risks, mapping and publishing Flood Insurance Rate Maps of those risks, helping communities meet floodplain management requirements, and communicating the benefits of flood insurance protection so that more Americans are reimbursed for flood damage through the insurance mechanism, rather than through Federal disaster assistance funds.

In the wake of recent events, FEMA identified the following service gaps within the NFIP’s current risk rating approach: (1) policyholders didn’t understand their flood risk and (2) the relationship between risk and rate are often inconsistent between structures with similar risk. Therefore, FIMA is redesigning and modernizing their current risk rating approach to address these service gaps and improve overall customer experience through the Risk Rating and Product Redesign Program.

The Risk Rating and Product Redesign Program is being developed within FIMA’s Risk Management Directorate, which delivers quality risk data, modeling and programs that increase the public’s awareness of risk across the range of natural hazards and leads to actions that reduce risk to life and property and Federal Insurance Directorate, which provides customer-focused flood insurance to help survivors and their communities effectively recover from flood events.

FEMA requires a contact solutions that aligns with industry’s best practices that are proven, efficient, easy to implement and effective. To achieve this goal, the Risk Rating and Product Redesign Program is being completed in three phases:

Phase 1 – Explore (Risk Rating and Classification Services)

• Development of a rating methodology “proof of concept”

• Evaluation of rating methodology using two geographies

Phase 2 – Build (Risk Rating and Policy Forms Development Services)

• Development of new policy forms and test against new rating plan

• Scaling the rating methodology to national level

• Development of risk rating engine

Phase 3 – Finish (Risk Rating & Policy Forms Implementation Services)

• Training of key program stakeholders

• Country-wide communications

• Delivery of new rating engine

FIMA has procured risk rating and classification services to support Phase 1 efforts (via a contract award) to deliver accurate, cost-effective ratings of flood risk to property owners.

FIMA has also recently procured risk rating and policy forms development services to begin Phase 2 (via a contract award). The risk rating and policy forms development services Contractor will improve the NFIP insurance product and policyholder experience by assisting the Government to:

• Provide an insurance product that customers’ value

• Improve the ability of policyholders to understand their flood coverage, the key risk drivers of their flood insurance costs, and choices that affect coverage and cost.

• Enhance the ability of agents to explain the value proposition of flood coverage to their policyholders

• Allow the NFIP to more readily implement and oversee an efficient, timely, correct, and consistent claims adjusting process

• Expand the ability of the NFIP to engage a large number of trained, experienced independent claims adjusters for large-scale catastrophic events

• Allow agile delivery of solution to successive market subsets

FIMA is now engaging industry to determine what services will be required to support these efforts during Phase 3 – Finish. Once industry input is obtained, FIMA intends to contract for this support through a competitive bidding process.

2. Scope:

The purpose of the acquisition (Phase 3) is to support the implementation and the change management of the newly developed risk rating approach and redesigned policy forms. The NFIP currently has in place multiple capabilities to support the upcoming risk rating and policy forms implementation and the successful Contractor(s) for this award, if any, will be responsible for working with and integrating existing systems and capabilities. The contractor shall provide support to FIMA in the wholesale transformation of the NFIP and the changes associated including:

• Changes associated with insurance - including impact on customer

• Changes associated with other stakeholders

• Organizational alignment

The vision of the redesigned NFIP risk and policy forms is to improve the NFIP insurance product and policyholder experience, by accomplishing the following:

Through Risk Rating Redesign:

Rates will be a fair representation of risk.

Rates will be clear about the risk factors that drive citizen and community mitigation and insurance decisions—ultimately saving lives and property.

Rates will take advantage of technology and data to be delivered as broadly and efficiently as possible.

Through Product Redesign:

Insurance products will be simpler so policyholders understand their flood coverage.

Insurance products will align with industry products to enhance agents’ ability to sell flood coverage and adjusters’ ability to efficiently adjust claims.

Insurance products will provide choice to policyholders.

3. Objectives of Phase 3.

Objective 1: NFIP Insurance Transformation Change Management and Organizational Alignment [To be implemented across Objectives 2-7]

• The Contractor shall assist the NFIP in identifying organizational, business process, leadership, and human capital changes needed to implement the NFIP’s new risk rating approach and policy forms

• The Contractor shall develop strategies to successfully manage identified changes and ensure strong organizational health

• The Contractor shall develop a master plan inclusive of scheduling, sequencing, and milestones to successfully implement change management and organizational health strategies resulting in strong adoption of change and strong organizational alignment

Objective 2: Training

• The Contractor shall assess the need, develop, and conduct training for stakeholders to ensure they understand and are able to deliver the new risk rating approach and insurance products to be delivered in multiple forums and formats which includes:

The underwriting process and how to apply the new rates. Application of rates to risk will be captured, documented, and the underwriters will need to know how to apply to both the current policy forms and new policy forms being developed

The use of financial and reporting system under the new risk rating approach The claims adjustment process under the new risk rating approach o Stakeholders include but are not limited to:

FIMA Staff and Contractors

• Insurance

• Risk Management

• Mitigation

• FEMA regions

• NFIP Direct

Industry

• WYOs

• Vendors

• Agents

• Real estate agents

• Floodplain managers

• Mortgage lenders

• Flood zone determination industry

• State insurance commissioners

• Others

• The Contractor shall create training materials for all the above mentioned training requirements to be delivered in multiple forums and formats. The Contractor should expect to collaborate with both FIMA staff and other Contractors to establish these materials. Where appropriate, the Contractor may assist other contractors in delivering training materials at already established forums

• The Contractor shall explore the possibility of establishing training sessions that would meet state level continuing education requirements for agents and if applicable, assist with execution and delivery

Objective 3: Communications

• The Contractor will be responsible for developing content for comprehensive, proactive, and understandable communications with industry to allow companies to prepare for and promote FEMA’s newly developed risk rating approach and insurance products to be delivered through existing forums.

o Industry entities include but are not limited to the following:

WYOs Vendors Agents Real estate agents Floodplain managers Mortgage lenders Flood zone determination industry State insurance commissioners

• The Contractor will be responsible for developing content for comprehensive and proactive communications content with FIMA to ensure FIMA staff understand impact on operations and are prepared for implementation of FEMA’s newly developed risk rating approach and insurance products

• The Contractor shall update all web content

• The Contractor will be responsible for developing content for comprehensive and proactive communication with the NFIP customers to ensure a smooth transition and positive customer experience

• The Contractor will assist FEMA with updating all guidance documents such as, but not limited to:

o The Flood Insurance Manual o The Claims Manual

Objective 4: Public Awareness Campaign

• The Contractor shall assist with developing a nation-wide public awareness campaign for existing and new customers in order to ensure successful implementation and public awareness of the NFIP’s new risk rating methodology and insurance products, in service of FIMA’s objective of doubling insurance coverage by 2023. Public awareness campaign methodologies include but are not limited to traditional media, social media, website development, and event coordination/implementation.

• The Contractor shall develop recommendations to brand and promote the following risk rating methodology and insurance product changes:

o Price changes o Different rates and situations o Mitigation steps and impacts to insurance rates o Coverage types

• The Contractor shall partner with FEMA public affairs in the public awareness campaign

• FEMA may decide to deliver flood risk information through a software application. If this application is developed, the Contractor would support increasing public awareness of the application

• FEMA may decide to deliver a quoting engine through a public facing website. If this website is developed, the Contractor would support increasing public awareness of the website

Objective 5: Integration

The Insurance Transformation Initiative Contractor shall identify necessary changes and modifications to existing FEMA systems and capabilities to ensure successful integration of new processes with the existing systems and capabilities, including but not limited to:

• Financial reporting system

• Claims journey system(s) and capabilities

• Direct-side system(s) and capabilities

• NFIP stakeholder and training system(s) and capabilities

• NFIP marketing capabilities

• NFIP call center

• Application developers o Coordinate with application developers to capture, refine, and implement requirements o Support testing of IT system(s)

• WYO and vendor systems

Objective 6: Support Services

• The Contractor shall write a script for the NFIP’s call center (not public-facing) for 1-2 years to help WYOs, vendors, and other industry partners troubleshoot issues due to the new risk rating system and insurance products

• The Contractor shall assist the program with drafting supporting documentation of the processes established for the implementation of the risk rating approach and insurance products, to ensure the Government’s ability to replicate in the future

Objective 7: Risk Rating Engine Delivery

FEMA will be developing a risk rating engine to produce the rates electronically. The Contractor shall help develop and execute a strategy to integrate that engine with existing systems, both internal and external. In order to achieve this outcome, the Contractor shall:

• Ensure robust understanding of how the rate engine works in individual WYO business models considering the following:

o Software o Each company’s actual rating capabilities

• Promote and brand the risk rating engine to all necessary audiences including WYO (agents, flood specialists, underwriters), direct, vendors, public, and FIMA)

• Train internal and external staff, key stakeholders on how to use the rating engine and any associated applications to promote proper and robust usage