Industry_Day_Slides_(Final).pdf

FE

NFIP Insurance Transformation Initiative

Request for Information: 70FA6018I00000001

Industry Day

February 2018

Federal Emergency Management Agency (FEMA) -

Federal Insurance and Mitigation Administration (FIMA) http://www.intranetasi.com/graphicsLibrary/index.cfm?event=graphics.downloadDoc&graphicID=|6B1ACFD8A060BEAC http://www.intranetasi.com/graphicsLibrary/index.cfm?event=graphics.downloadDoc&graphicID=|6B1ACFD8A060BEAC

Slide 2

Introductions

Insurance Transformation Initiative Program Office

Andy Neal, Actuarial and Catastrophic Data Modeling Branch Chief

Claudia Murphy, Policyholder Services Division Director

Karolyn Kiss, Insurance Examiner

Insurance Transformation Initiative Procurement Office

David Orris, Contracting Officer

Renee Gardner, Contract Specialist

Industry Liaison Office

Slide 3

Purpose and Outcomes

Purposes:

Provide an opportunity for insurance industry to learn about the National Flood Insurance Program (NFIP) Insurance Transformation Initiative

Provide an opportunity for FEMA to gain industry feedback about the upcoming NFIP Insurance Transformation Initiative procurement

Outcomes:

Align on NFIP Insurance Transformation Initiative case for change, vision, and timeline

Clarity on required objectives for the NFIP Insurance Transformation Initiative procurement

Shared basic understanding of current and future risk rating experience

Slide 4

Guidelines

Our Adobe Connect speakers are turned off and we have made the dial-in “listen only” for all participants

This Request for Information (RFI) 70FA6018I00000001 Industry Day is for the NFIP Insurance Transformation Initiative procurement

Procurement rules (the Federal Acquisition Regulation) apply to all communications

Prospective offerors shall only communicate through the Contracting Officer or Contract Specialist

Please submit all questions and responses in writing to the Contracting Officer and Contract Specialist

There will be a short Q&A session as part of this VTC

If you or your company representative did not register for today’s Industry Day, please do so by emailing David Orris and Renee Gardner promptly after this event concludes

Slide 5

Agenda

Risk rating and product redesign background

Policy forms

Rate engine

NFIP insurance transformation background and requirements

NFIP insurance transformation requirements question and answer session

Closing

Slide 6

Risk Rating Background

Current rating system jointly developed by NFIP and private insurance industry

Current system was developed in the 1960’s and 1970’s

Based on best practices of fire and home insurance sector

NFIP has not stayed current with industry

NFIP risk rating approach has changed over time but without real regard for industry

Need to develop an approach that can be continuously upgraded and stay current

A customer-experience assessment identified the following gaps:

Policyholders lack understanding of their flood risk

Inconsistency in program value proposition

Slide 7

Case for Change-What we’ve heard

Outdated and cumbersome

Levees and dams are not considered

Not based on granulated risk

Hindered by regulation

Little to no explanatory resources

Inaccurate, based on 1% event

Surcharges on premium are unrelated to risk

Not current with industry

Subjective rating and pricing system

Outdated

Overly complex

Unclear risk and price drivers

Structural differences not accounted for

Slide 8

Risk Rating and Product Redesign Vision

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.

Slide 9

Deliver

Rates

Develop, ATO

Engine

Year 1: 2017 Year 2: 2018 Year 3: 2019 Year 4: 2020 Year 5: 2021 Year 6: 2022

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct

Develop RatesSegment 1

Segment 2

Develop rating approach

Maintain Legacy Systems

Publish

Rates

Announce Plan to Change Rates

Develop Rates Publish

Rates

Deliver

Rates

Segment 3 Develop Rates Publish

Rates

Deliver

Rates

Test, Integrate, Implement

Engine

Develop

Draft Forms

Finalize

Forms

Rule-making

Deliver

Forms, Update

Rates

Notional High-Level Timeline Subject to Change

Slide 10

NFIP must provide insurance products that customers value and agents can easily sell

New forms will be understandable to policy holders, agents, and adjusters

FEMA will test the new forms against the rating plan to determine whether pricing is realistic

New policy forms will mirror industry contracts with an emphasis on plain language

New Policy Forms

Slide 11

Developing new policy forms that align with industry forms

Current State: Three policy forms

Example Future State: Align with Property & Casualty industry

• Dwelling

• General Property

• Residential Condominium

Building Association Policy

• Residential (building and/or contents)

• Residential Renters Comprehensive

• Residential Renters (building and/or contents)

• Condominium Unit Owner

• And Others

New Policy Forms

Slide 12

Distance to coast

LOW

You are relatively far from the coast. This results in a decrease to your premium.

view details

Relative elevation

HIGH

Your home is low lying. This results in an increase to your premium.

High volume rain events could flood your home even though you are not near a flooding source.

view details

Basement

LOW

Your home does not have a basement. This results in a decrease to your premium.

view details

YOUR FLOOD INSURANCE PREMIUM FOR JANUARY 2018

Your flood insurance premium is

Mitigation actions to reduce risk view details

SAMPLE RISK FACTORS

LOW

User Experience: Notional Prototype Graphic

Slide 13

Phase 1 – Explore

Development of a rating methodology “proof of concept”

Evaluation of rating methodology using two geographies

Phase 2 – Build

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

Communicating changes to key program stakeholders

Communicating changes to policyholders and prospective policyholders

Delivery of new rating engine

Background

Slide 14

Purpose of this acquisition is to support the implementation and change management of the newly developed risk rating approach and redesigned policy forms

NFIP currently has multiple capabilities to support the upcoming risk rating and policy forms implementation

Successful Contractor(s) shall be responsible for working with and integrating with existing systems and capabilities (Objective 5)

Contractor shall provide support to FIMA in the wholesale transformation of the NFIP including:

Managing the impact of the changes on the customer

Managing the impact of the changes on other stakeholders

Realignment of FIMA with changes

Slide 15

Objective 1: NFIP Insurance Transformation Change Management and Organizational Alignment

Objective 2: Training

Objective 3: Communications

Objective 4: Public Awareness Campaign

Objective 5: Integration

Objective 6: Support Services

Objective 7: Rate Engine Delivery

Requirements

Slide 16

Identify organizational, business process, leadership, and human capital changes needed to implement the new risk rating approach and redesigned policy forms

Develop strategies to successfully manage identified changes and ensure strong organizational health

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 1: Change Management and Organizational Alignment

Slide 17

The NFIP currently has training capabilities via Contractor support

The Insurance Transformation Initiative Contractor will 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

Create training materials

Expect to collaborate with FIMA staff and other Contractors

Objective 2: Training

Slide 18

The NFIP currently has communications capabilities via Contractor support

Develop 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

Develop 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

Develop content for comprehensive and proactive communications with the NFIP customers to ensure a smooth transition and positive customer experience

Update all guidance documents (Flood Insurance Manual and Claims Manual)

Objective 3: Communications

Slide 19

The NFIP currently has marketing capabilities via Contractor support

Assist with developing a nation-wide public awareness campaign for existing and new customers to ensure successful implementation and public awareness of the NFIP’s new risk rating methodology and insurance products

Develop recommendations to brand and promote risk rating methodology and insurance product changes

Partner with FEMA public affairs

Support increasing awareness of software and websites as applicable

Objective 4: Public Awareness Campaign

Slide 20

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

WYO and vendor systems

Objective 5: Integration

Slide 21

Write a script for the NFIP’s call center for 1-2 years to help WYOs, vendors, and other industry partners to troubleshoot issues due to the new risk rating system and insurance products

Draft supporting documentation of 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 6: Support Services

Slide 22

Develop and execute strategy to integrate risk rating engine with existing internal and external systems

Ensure robust understanding of how the rate engine works in individual WYO business models

Promote and brand the risk rating engine to all necessary audiences

Objective 7: Rate Engine Delivery

Slide 23

Ground Rules:

We will now monitor the “chat” function on Adobe Connect and participants will be able to type questions into the chat and the Program Office will orally answer technical questions pertaining to the requirements

The chat will be the only method of asking questions – voice and audio will not be enabled

Questions may not be answered during this time for any reason

If your question is not answered during this time, please resubmit to the Contracting Officer and Contract Specialist prior to the RFI question due date

Discussion

Slide 24

Objective 1: NFIP Insurance Transformation Change Management and Organizational Alignment

Objective 2: Training

Objective 3: Communications

Objective 4: Public Awareness Campaign

Objective 5: Integration

Objective 6: Support Services

Objective 7: Rate Engine Delivery

Requirements

Slide 25

Upcoming Milestones

Milestone Date (subject to change)

Industry written questions due to Contracting Officer and Contract Specialist

NLT 2:00 p.m. (EST) February 7th

Government answers posted on www.FBO.gov NLT 5:00 p.m. (EST) February 9th

Industry written responses due to Contracting Officer and Contract Specialist

NLT 2:00 p.m. (EST) February 13th http://www.fbo.gov/

Slide 26

Contracting Officer - David Orris:

David.Orris@fema.dhs.gov

Contract Specialist - Renee Gardner:

Renee.Gardner@fema.dhs.gov

Points of contact (POC) mailto:David.Orris@fema.dhs.gov mailto:Renee.Gardner@fema.dhs.gov

Slide 27

Thank you for joining us – we look forward to continuing the conversation with you