Bill Would Give Millions Alternative To Embattled Federal Flood Insurance Program
WASHINGTON – SmarterSafer.org – a coalition of taxpayer advocates, environmental groups, insurers, and mitigation and housing organizations – today urged Members of the House of Representatives to support the Flood Insurance Market Parity and Modernization Act. The bill would allow more private insurers into the marketplace and give millions of Americans an alternative to the increasingly troubled National Flood Insurance Program.
In a statement, SmarterSafer.org said, “With the National Flood Insurance Program sinking under $24 billion in debt, we must start finding other means to cover those in harm’s way. The bill is a good way to begin opening the flood insurance market to private insurers, who have more flexibility to offer policies that fit the true level of risk. By better informing policyholders of the growing risks they face, this bill will help homeowners and businesses make more well-informed and cost-effective choices, ultimately lowering costs and better protecting lives and property.”
The bill, introduced earlier this month by Representatives Dennis Ross (R-FL) and Patrick Murphy (D-FL), will expand the role of private companies in the flood insurance market, which has long been dominated by the National Flood Insurance Program. Today, the program is struggling with dangerously high debt and popular opposition to reforms that could help return the program to financial health.
NFIP has amassed over $24 billion in debt after the destruction of several strong storms, including Hurricanes Sandy and Katrina, and receives under $4 billion in premiums annually to pay the debt down. In 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act to start making headway on this debt by reducing insurance subsidies that had kept policy rates below their true level of risk for years. Unfortunately, these reforms were reversed this year after heavy opposition from homeowners and businesses alarmed at the loss of subsidies. A bill passed in March significantly weakens Biggert-Waters, endangering the future of the NFIP and the policyholders who rely on it.
With no legislative solution in sight, many states, including West Virginia, Florida, and Connecticut, have begun to loosen restrictions that have barred private companies from the insurance market. The bill from Reps. Ross and Murphy would accelerate this process by giving states more leeway to construct their own regulatory framework.
“With the future of NFIP in jeopardy, it should come as no surprise that states have begun to take matters in their own hands,” said SmarterSafer.org. “Letting private insurers step in where NFIP has failed is a commonsense way to protect Americans who rely on flood insurance to keep their homes and families safe.”