In his ongoing efforts to foster a competitive private flood insurance market in Florida, state Sen. Jeff Brandes, R-St. Petersburg, recently requested help from the state’s Office of Insurance Regulation to obtain data from the federal government that justify the rates the National Flood Insurance Program charges Floridians for their for flood insurance coverage.

The information – held by the NFIP’s overseer, the Federal Emergency Management Agency – would include loss-projection models, actuarial figures and actual loss-history data that private companies looking to write flood coverage in Florida could use for their rate-making

Florida Insurance Commissioner Kevin McCarty replied that his office would request the information. Most notable in his reply, however, was his statement that the NFIP’s rates would be considered “unfairly discriminatory” under Florida law, given the lack of actuarial information available, coupled with the federal program’s admitted rating system based largely on averaging multiple zones together with a “theoretical determination of the probability of flooding.”

Merely averaging together different risks and charging one rate would force those at a lower risk of loss to pay more than they otherwise should, which Florida law considers “unfairly discriminatory.” A Florida insurance company doing this would be sanctioned by regulators; however, because the NFIP is a federal program, rather than an admitted insurance carrier, the state has no oversight over it.

In 2014, Brandes and Rep. Larry Ahern, R-Seminole, sponsored S.B, 542, later passed by the Legislature, authorizing private carriers to offer flood coverage within Florida’s insurance regulatory framework. Earlier this year, the legislature passed S.B. 1094 – also sponsored by Brandes and Ahern – which increases coverage options for flood insurance beyond the NFIP.

However, given that the NFIP has been the sole provider of flood insurance, only they hold the historical-loss data and other information private companies need to set their rates.

FEMA has been reluctant to release its loss history data from properties covered by the NFIP, citing “privacy concerns.” It’s understandable that NFIP policyholders may not want their claims history made public. However, this is, ultimately, public data that can and should be released to private companies and/or to state insurance regulators. Personally identifiable information can be safeguarded with nondisclosure agreements and stiff penalties for violators. Many private entities exchange confidential data with government agencies every day, and the NFIP should be no different.

Ultimately, it is in the interests of consumers, policyholders and taxpayers alike to shift as many policies away from the NFIP and onto the private market. Doing so will give consumers more coverage options, decrease rates and save taxpayers from having to bail out the NFIP every time there is a major flood event.

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