Filed Under:Agent Broker, Personal Lines Business

House committee OKs private Flood insurance bill

The Flood Insurance Market Parity and Modernization Act would expand options for consumers, advocates say. (Photo: iStock)
The Flood Insurance Market Parity and Modernization Act would expand options for consumers, advocates say. (Photo: iStock)

A bill that supporters say would open up the Flood insurance market to more private insurers was approved by a U.S. House committee today.

The House Financial Services Committee gave its consent to the Flood Insurance Market Parity and Modernization Act, H.R. 2901, which requires private Flood insurance to be treated the same as federal Flood insurance for homeowners with federally backed mortgages who are required to buy coverage.

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

Supporters say the bill will foster more competition in the Flood insurance market, and provides an alternative for 5 million property owners who rely on the U.S. government’s National Flood Insurance Program (NFIP), which is $23 billion in debt.

Washington, D.C.-based SmarterSafer, a coalition that promotes environmentally responsible, fiscally sound federal policies, said the major obstacle to private sector Flood insurance has not been regulation but rather the inability of private carriers to compete with the subsidized premiums offered by the NFIP.

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

The legislation defines as acceptable a policy issued by a private insurance company that is licensed, admitted, or otherwise approved in the state in which the insured property is located, the group said. A policy issued by a non-admitted insurer, one that hasn't been approved by a state's insurance department, would also qualify.

The insurance industry is pleased with today's vote.

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

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

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

"The Flood Insurance Market Parity and Modernization Act, passed this week by the House Financial Services Committee, is a major step forward not only for consumer choice but also constitutes progress in enhancing the the financial integrity of the NFIP while at the same time protecting taxpayers," he said. "Private insurers appreciate the protection the Act affords them by guaranteeing parity with NFIP policies while at the same time preserving the NFIP to fulfill its vital role. Advances in the science and modeling of flood risk, combined with ample capital in primary and secondary markets, combined with the looming NFIP reauthorization in 2017, make 2016 a propitious moment to enhance access and choice in the nation's Flood insurance markets."

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

Related: Flood insurance on the cusp of tremendous change

Have you Liked us on Facebook?

Related

What will Flood insurance look like after 2017?

Legislators appear eager to get to work on extending and reforming the National Flood Insurance Program, which expires in 2017....

Featured Video

Most Recent Videos

Video Library ››

Top Story

6 homeowners’ policy endorsements agents and brokers need to know

It's the insurance agent or broker's job to explain a policy to the buyer, including the available endorsements, and they need to know which endorsement best fits the client’s situation.

Top Story

Top large commercial brokers and insurers based on customer satisfaction

The key variables driving overall commercial insurance customer satisfaction are broker expertise and insurer profitablity, according to the J.D. Power 2016 Large Commercial Insurance Study.

More Resources

Comments

eNewsletter Sign Up

Agent & Broker Insider eNewsletter

Proven success tips and essential information to help agents and brokers grow their practice – FREE. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.