Want privatization? Fla. recommends higher federal rates
Faced with reforming and reauthorizing NFIP before the program expires in December, Congress is gun-shy about raising rates again. And White House proposals to limit subsidies for all but low-income policyholders have fallen on deaf ears.
This time around, lawmakers are hoping that regulatory clarity will nudge more private companies toward covering flood risk.
The proposal with the most traction comes from Florida Reps. Dennis Ross (R) and Kathy Castor (D). Proponents of the bill say it would fix a blunder made during the 2012 NFIP reauthorization.
Then, Congress reformed the program to allow homeowners in 100-year floodplains to carry private policies but said they had to be “substantially similar” to ones offered by the federal government.
Banking regulators, however, have been skittish about defining that term, and the private market has remained small as a result.
Ross and Castor want to clarify that private insurance fulfills federal requirements and would empower state insurance commissioners to decide when private policies are “substantially similar” until banking regulators come up with their own definition.
“We see this as basically a technical correction,” says R.J. Lehmann, a senior fellow at the free-market-oriented think tank R Street Institute.
