An encouraging update regarding flood insurance in Florida
From Robin Madden:
Insurers ‘encouraged’ by flood insurance rate talks
TALLAHASSEE, Fla. – Dec. 16, 2015 – The Federal Emergency Management Agency (FEMA) on Tuesday acknowledged “concerns about fairness” in flood insurance rates and said it will respond to a request by Florida’s top regulator for data to help private insurers better set rates and compete.
Florida Insurance Commissioner Kevin McCarty had asked for key rate information from FEMA administrator Craig Fugate.
“FEMA has received the letter and will respond directly to Commissioner McCarty,” agency spokeswoman Susan Hendrick said Tuesday. “We are aware of Commissioner McCarty’s concerns about fairness in flood insurance policy rates, and FEMA is committed to ensuring our rate-setting process is transparent and appropriate.”
The agency hopes to have additional conversations with Florida regulators “as we publish ongoing and new public disclosures about our rate-setting process,” she said.
McCarty, responding to a question from state Sen. Jeff Brandes, R-St. Petersburg, said earlier this year he would have to conclude National Flood Insurance Policy (NFIP) rates are “unfair and discriminatory” if he regulated them in Florida.
Florida has the nation’s most flood insurance policies by far – almost 40 percent of the more than 5 million U.S. policies – but over many years has gotten back in claim payments less than 30 percent of what it pays in premiums, McCarty said.
Brandes invited state insurers to a workshop this month designed to help them get more information about offering flood insurance themselves. The federal program dominates a market private insurers have largely avoided, though private agents and companies often take fees to administer NFIP policies without assuming any risk. Standard homeowner policies do not cover flood damage.
The talks are a good sign, said a group representing insurers, the Property Casualty Insurers Association of America (PCI).
“PCI is encouraged by the ongoing discussion between FEMA and the Florida Office of Insurance Regulation on the sharing of flood insurance rate-setting data,” said Chris Hackett, the group’s director of personal lines policy. “It is critical that private insurers have access to data instrumental to the appropriate pricing of flood insurance policies. The sharing of information will promote a more competitive marketplace for flood insurance.”
The group supports “private market insurance solutions that bolster consumer choice,” Hackett said. “We look forward to continuing our work with all stakeholders in order to support a market that provides consumers the most flexibility and choice for their insurance needs.”