Legislation to allow privatized flood insurance on the market surged unanimously through a House Financial Services Committee mark up. Voting 53-0 on March 2nd, the Committee approved the idea of enabling private flood insurance plans to be sold separately from the National Flood Insurance Program.
The Flood Insurance Market Parity Act (H.R. 2091) is sponsored by Representatives Dennis Ross (R-FL) and Patrick Murphy (D-FL). According to Rep. Ross, “Americans across the country would greatly benefit from more choices when it comes to flood insurance policies, and private competition in this market will lead to greater innovation and more affordable and comprehensive policies for consumers in flood prone areas.” Rep. Murphy agrees with his colleague in the same press release, saying that their legislation would allow new market competition to “drive down the price of plans.”
H.R. 2091 lifts federal restrictions currently in place and grants states authority to regulate and license flood insurers. Any plan offered by state-approved private insurers must include coverage for the full price of the mortgage of the property.
The flood insurance market, due to its specific nature, is likely to remain relatively small. However, there is significant interest shown in the market by surplus line providers and strong support from the property and casualty insurance industry. The result could be a healthy, active marketplace. The President and Executive Director of the Association of Bermuda Insurers and Reinsurers Bradley Kading illustrated this in an email, saying, “There is a great deal of market interest in writing and reinsuring private flood insurance. The Ross-Murphy bill makes it crystal clear that private insurers can sell flood and meet mortgage market requirements. Let’s get this new legislation enacted so the market can better serve U.S. consumers with flood exposures.”
Now that H.R. 2091 has passed out of Committee and it will be reported to the full House to be considered for a vote. Considering the clear, bipartisan support behind it, it will be a good contender to be placed on the agenda sometime this year. Continue to check back for further updates.
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