A bill that supporters say would open up the Flood insurancemarket to more private insurers was approved by a U.S. Housecommittee today.

The House Financial Services Committee gave its consent to theFlood Insurance Market Parity and ModernizationAct, H.R. 2901, which requires private Flood insurance to betreated the same as federal Flood insurance for homeowners withfederally backed mortgages who are required to buy coverage.

The measure was sponsored by Reps. Dennis Ross (R-Fla) andPatrick Murphy (D-Fla).

Supporters say the bill will foster more competition in theFlood insurance market, and provides an alternative for 5 millionproperty owners who rely on the U.S. government's NationalFlood Insurance Program (NFIP), which is $23 billion indebt.

Washington, D.C.-based SmarterSafer, a coalition that promotesenvironmentally responsible, fiscally sound federal policies, saidthe major obstacle to private sector Flood insurance has not beenregulation but rather the inability of private carriers to competewith the subsidized premiums offered by the NFIP.

The current mandatory purchase requirement does not require thatthe insurance coverage be provided under the NFIP, however,mortgage lenders have said they are uncertain that private Floodcoverage satisfies current regulations and have mostly onlyaccepted NFIP policies. Thus the bulk of the business is writtenwith NFIP, according to SmarterSafer.

The legislation defines as acceptable a policy issued by aprivate insurance company that is licensed, admitted, or otherwiseapproved in the state in which the insured property is located, thegroup said. A policy issued by a non-admitted insurer, one thathasn't been approved by a state's insurance department, would alsoqualify.

The insurance industry is pleased with today's vote.

“The National Association of Professional Insurance Agentscommends the House Financial Services Committee for passing theFlood Insurance Market Parity and Modernization Act (H.R. 2901), ina bipartisan vote … The bill seeks to encourage the development ofa private Flood insurance market with strong consumer protectionsbeing overseen by state insurance regulators,” said Jon Gentile,vice president of government relations for the Alexandria,Va.-based NationalAssociation of Professional Insurance Agents.

“While PIA opposes outright, immediate privatization of theNational Flood Insurance Program, PIA supports sensible solutionsfor growing the private flood insurance market,” he said.

Robert Hartwig, president of the New York City-based Insurance InformationInstitute, agreed:

“The Flood Insurance Market Parity and Modernization Act, passedthis week by the House Financial Services Committee, is a majorstep forward not only for consumer choice but also constitutesprogress in enhancing the the financial integrity of the NFIP whileat the same time protecting taxpayers,” he said. “Private insurersappreciate the protection the Act affords them by guaranteeingparity with NFIP policies while at the same time preserving theNFIP to fulfill its vital role. Advances in the science andmodeling of flood risk, combined with ample capital in primary andsecondary markets, combined with the looming NFIP reauthorizationin 2017, make 2016 a propitious moment to enhance access and choicein the nation's Flood insurance markets.”

Gentile said the PIA has been working with members of Congressto advance the legislation. A companion bill, S. 1679, introducedby Senator Dean Heller (R-NV), awaits action.

Related: Flood insurance on the cusp of tremendouschange

Have you Liked us on Facebook?