Bills launched in House, Senate encourage private flood insurance market

U.S. Reps. Dennis Ross (R-FL) and Kathy Castor (D-FL) reintroduced this week the Flood Insurance Market Parity and Modernization Act, which encourages the development of a private flood insurance market, overseen by state regulators.

Currently, property owners can purchase National Flood Insurance Program (NFIP) insurance through the federal government. The Ross bill would give states more flexibility to license and regulate private flood insurance, providing more options for consumers.

“More choices and increased marketplace competition means better coverage, more innovation, and more affordable policies for homeowners,” Ross said.

The bill clarifies a provision from the Biggert-Waters Flood Insurance Reform Act of 2012 to allow private flood insurance to meet the mandatory purchase requirement of the NFIP. It also gives state insurance regulators the authority to determine what constitutes “acceptable” private market flood insurance.

“This bipartisan legislation is an important step towards a valuable alternative to the National Flood Insurance Program and relief from the flood insurance rate increases that threaten our hardworking families and businesses,” Castor said.

Sens. Dean Heller (R-NV) and Jon Tester (D-MT) sponsored the companion Senate bill.

“This legislation provides a clear definition of what is acceptable private flood insurance, as determined by state insurance commissioners, in order to provide more choices and protect consumers. We can reduce costs for some consumers, and increase flood insurance coverage options by further developing this marketplace,” Heller said.

The bill was first introduced last year where it advanced the House. The Senate companion did not move beyond the Senate Committee on Banking, Housing, and Urban Affairs.

“The National Flood Insurance Program is underwater and we need this bill to increase options for homeowners, renters, and small businesses,” Tester added.

The bill also allows for private flood insurance to satisfy NFIP continuous coverage requirements. That means that policyholders can obtain NFIP coverage without losing their grandfathered status if they leave the program, obtain coverage in the private market, and later find that this new coverage no longer meets their needs.

This legislation is supported by several stakeholders, including the Independent Insurance Agents and Brokers of America.

“[We thank] Sens. Heller and Tester and Reps. Ross and Castor for introducing this important legislation that clarifies that having an active flood insurance policy, whether through the NFIP or through the private market, should be considered continuous coverage for purposes of NFIP rating requirements,” Charles Symington, Independent Insurance Agents and Brokers of America senior vice president of external and government affairs, said.

The association supports the gradual development of a private market as a complement to the NFIP and will continue to advocate for timely reauthorization of the NFIP before it expires on Sept. 30, 2017, Symington said.

“We are pleased to support this legislation clarifying an important provision from the Biggert-Waters Flood Insurance Reform Act of 2012 allowing private flood policies to meet the mandatory purchase requirement of the NFIP,” Tom Santos, vice president for federal affairs for the American Insurance Association, said. “This clarification takes one step toward fostering a private flood insurance market, which will provide consumers additional options to insure against losses from flooding, and reduce taxpayer exposure.”