R Street welcomes federal bill to encourage private flood insurance
Introduced by Reps. Dennis Ross, R-Fla., and Patrick Murphy, D-Fla., H.R. 4558, the Flood Insurance Market Parity and Modernization Act, would liberalize the rules governing which privately underwritten flood insurance policies may be used to satisfy federal lending requirements. 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.
The bill’s introduction comes on the heels of the Florida Legislature passing legislation creating a statutory framework for the state Office of Insurance Regulation to regulate flood insurance offerings by admitted market companies. Similar legislation was signed in March by West Virginia Gov. Earl Ray Tomblin, while the Connecticut House of Representatives also passed a similar bill last month.
“While the market for private flood insurance remains quite small, we are encouraged that a growing number of insurers are considering whether to begin offering this coverage,” R Street Senior Fellow R.J. Lehmann said. “Several states are taking the appropriate first step to ensure the proper regulatory framework is in place and the federal government, for its part, should remove any inadvertent barriers to entry in this crucial market.”
“In the long run, the NFIP is simply unsustainable, as it remains $25 billion in debt to American taxpayers, a tally it has no ability ever to pay back. America will need a vibrant market of private capital to handle this risk in the years ahead,” Lehmann added.