Op-Ed

Florida’s flood laws can be a nationwide model

Miller
Miller

With Congress once again kicking the can down the road on needed reforms to the National Flood Insurance Program (NFIP) until its next expiration on Nov. 30, the time is ripe for the private insurance market to step up and play a greater role in providing Americans needed flood coverage.

Last month, the National Conference of Insurance Legislators (NCOIL), a group of state lawmakers from around the nation, began taking a closer look at Florida’s model flood insurance regulation to see if it can be used successfully to encourage a vibrant private market in all 50 states.

Those of us from Florida know the success it’s had here: The number of private companies offering flood insurance has more than doubled in the past two years (from 10 companies in 2016 to 25 companies as of the end of July). They’re also offering better pricing. Consumers are saving significant money through these private market alternatives.

The concept behind the Florida legislation is the adage, “If you build it, they will come.”

Earlier this summer, a team of us worked with Florida Rep. David Santiago, R-Deltona) and Sen. Jeff Brandes, R-Pinellas County, in crafting simple and permissive language to create and nurture a flexible and transparent private flood insurance regulatory framework in every state in the country. The result is this draft flood insurance narrative that was presented at the NCOIL meeting as a proposed Part V to NCOIL’s national model flood disaster relief bill. It’s based on Section 627.715 of Florida Statutes, which is the state’s private flood insurance law, enacted in 2015.

Florida’s flood insurance laws are simple and flexible, with the goal of providing consumer choices and alternatives to the debt-ridden, outdated and increasingly expensive NFIP.

The draft narrative language provides the following:

▪ Form approval if the regulator currently requires such to ensure policies meet or exceed available NFIP coverage.

▪ The ability for insurance companies to test rates in the market without prior approval.

▪ Notice of intent from insurance companies to regulators to enter the market.

▪ Consumer education by insurance agents about flood peril and the coverages available.

▪ Regulator certification that the policies are adequate to meet banking regulation mandates in mortgages

Most of the provisions in the draft narrative have the word “may,” so the provisions are permissive. It is written in a manner that is not technical, is an easy read, and can serve as the framework for states wishing to reduce their reliance on federal flood insurance.

There are significant premium savings overall that the private insurance market is bringing to consumers. In Miami-Dade County, ground zero for Hurricane Andrew in 1992, one private insurer’s average premium is $677 compared to the NFIP’s $980 average. In Broward County, the average premium comparison is $250 vs. $503.

In the coming months, this draft model language will be further refined and hopefully voted on, in its entirety, at NCOIL’s December meeting in Oklahoma. We will continue to work with those who follow NCOIL activity to educate them on the necessity of basic ground rules for a regulatory framework that promotes a private flood insurance market and to start the conversation, state by state, about it.

While Congress is likely going to continue to put off full reauthorization of the NFIP, it’s important to have this model private flood insurance legislation to let Washington know that, “We got this.”

Lisa Miller is a former Florida deputy insurance commissioner.

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