Florida should encourage private flood insurance market
TALLAHASSEE, Fla. (Nov. 5, 2013) -– As Florida lawmakers ponder potential legislative responses to rising flood insurance rates, it is crucial no additional catastrophe risk burdens be placed on the backs of already-strapped taxpayers, R Street Institute Florida Director Christian Cámara argues in a new policy backgrounder.
Scheduled rate increases by the National Flood Insurance Program has led to the phase-out of premium subsidies for second homes, business properties and those that have seen severe repetitive losses, while other properties may see their rates increase due to updates in flood maps drawn by the Federal Emergency Management Agency.
The rate hikes have sparked some private sector interest in writing flood risks, from both the surplus lines market and admitted market insurers. As members of the Legislature gather in the state capital this week for interim meetings, Cámara suggested those concerned about flood insurance rates should look for ways to encourage this trend.
“Lawmakers should explore ways to establish a regulatory environment where private companies might consider offering flood coverage in Florida as an alternative to the NFIP by lifting the barriers to private sector innovation, which should include streamlining rate and form regulations,” Cámara wrote.
However, he also urged them to reject any proposal that calls for the creation of a state flood pool or fund. The expansion of any existing state-run insurance entity –such as on Citizens Property Insurance Corp. or the Florida Hurricane Catastrophe Fund – to cover flood should also be rejected, even if it is crafted to be “self-sufficient.”
“Florida has a well-documented history of conceiving state-run insurance programs that are initially well-intentioned and seemingly well-designed, but are eventually corrupted by the infusion of politics,” Cámara wrote.
The full text of the backgrounder can be found here:
http://www.rstreet.org/policy-study/a-state-approach-to-flood-insurance-reform-in-florida/
