R Street welcomes Florida bill to authorize private flood insurance
Sponsored in the state Senate by Sen. Jeff Brandes, R-St. Petersburg, S.B. 542 authorizes insurers to write policies, contracts and endorsements for flood insurance coverage with minimums that match the requirements set by Fannie Mae and Freddie Mac for conforming mortgage loans. Rep. Larry Ahern, R-Seminole, has announced plans to introduce companion legislation the state House in the coming weeks.
The legislation upholds the principles set out by R Street Institute Florida Director Christian Cámara last month in the policy brief “A state approach to flood insurance reform in Florida.”
“Broadly speaking, Sen. Brandes and Rep. Ahern are looking to find private sector solutions to alleviate the impact of sharply higher rates that may affect some National Flood Insurance Program policyholders in Florida,” Cámara said. “This bill responds to clear market demand to create these products, offers consumers more choices and, most importantly, does not put taxpayers on the hook through yet another state-backed insurance mechanism.”
The Florida Office of Insurance Regulation would have authority to review and approve flood insurance rates, although insureds would retain the right to grant explicit consent to choose an alternative rating method not reviewed by the OIR. Surplus lines agents also would have the ability to export policies to surplus lines carriers without obtaining three declinations, which would usually be required by law.
Insurers with less than $35 million in surplus would need to submit a plan of operations to begin offering the coverage. The bill also would add an expert in floodplain modeling to the Hurricane Loss Modeling Commission, allow the commission to review floodplain models used by private insurers and grant flexibility in how private insurers reach their actuarial models for flood loss.