R Street welcomes bipartisan bills to encourage private flood insurance
WASHINGTON (June 25, 2015) — The R Street Institute welcomed today’s introduction of bipartisan legislation streamlining the process for private companies to begin offering, and states to begin regulating, flood insurance coverage options outside of the National Flood Insurance Program.
Introduced by Reps. Dennis Ross, R-Fla., and Patrick Murphy, D-Fla., and Sens. Dean Heller, R-Nev., and Jon Tester, D-Mont., H.R. 2901 and S. 1679, the Flood Insurance Market Parity and Modernization Act, would broaden which privately underwritten flood insurance policies may be used to satisfy federal lending requirements.
“Congress made clear in the 2012 flood insurance reform bill that banks and other lending institutions should accept privately underwritten flood insurance on the same terms as coverage written by the National Flood Insurance Program,” R Street Senior Fellow R.J. Lehmann said. “This legislation will aid banking regulators in determining what sorts of coverage should qualify, relying largely on the states, who already take the lead in regulating the business of insurance.”
Under terms of the bill, any company admitted to write policies in a given state, or surplus lines writer not disqualified by that state, could offer the coverage.
Some states have already begun leading the charge of modernizing the flood insurance market. Florida, West Virginia, Connecticut, Pennsylvania and Massachusetts have all created frameworks for state regulators to oversee flood insurance offerings by admitted market companies.
“The private market for flood insurance remains small, but a growing number of insurers and reinsurers have expressed interest in offering more flexible products to consumers,” Lehmann said. “If we are ever to unwind the deeply indebted and unsustainable NFIP, it’s crucial to take these kinds of steps to encourage a vibrant market of private capital to handle this risk in the years ahead.”
