The Reinsurance Association of America is voicing strong supportfor legislation being considered by the Florida legislature aimedat encouraging insurers to offer private alternatives to coveringflood risk.

The Florida bill, introduced in the state Senate by Sen. JeffBrandes, R-St. Petersburg, authorizes insurers to write policies,contracts and endorsements for flood insurance coverage withminimums that match the requirements set by Fannie Mae and FreddieMac for conforming mortgage loans, according to R. J. Lehmann, asenior fellow at the R Street Institute.

R Street Florida Director Christian Cámara says Rep. LarryAhern, R-Seminole, has announced plans to introduce companionlegislation in the state House in the coming weeks.

"Broadly speaking, Sen. Brandes and Rep. Ahern are looking tofind private-sector solutions to alleviate the impact of sharplyhigher rates that may affect some National Flood Insurance Programpolicyholders in Florida," Cámara says. "This bill responds toclear market demand to create these products, offers consumers morechoices and, most importantly, does not put taxpayers on the hookthrough yet another state-backed insurance mechanism."

Cámara says that, under the bills, the Florida Office ofInsurance Regulation would have authority to review and approveflood-insurance rates, although insureds would retain the right togrant explicit consent to choose an alternative rating method notreviewed by the OIR.

Surplus-lines agents also would have the ability to exportpolicies to surplus-lines carriers without obtaining threedeclinations, which would usually be required by law.

Insurers with less than $35 million in surplus would need tosubmit a plan of operations to begin offering the coverage. Thebill also would add an expert in floodplain modeling to theHurricane Loss Modeling Commission, allow the commission to reviewfloodplain models used by private insurers and grant flexibility inhow private insurers reach their actuarial models for floodloss.

The RAA also used the occasion to strongly criticize initiativesin the U.S. Senate to delay the flood-insurance rate increasesimposed by a 2012.

Frank Nutter, RAA president, said that would "leave taxpayers atrisk and the bankrupt [National Flood Insurance Program] weakenedand potentially unable to pay its claims."

Nutter notes, "Rather than irresponsibly delaying reforms, whichthe Congressional Budget Office estimates would cost billions, theRAA supports targeted reforms to help homeowners most in need,while maintaining the benefits of risk-based rates and incentingcommunity and individual mitigation."