by Caitlin Bronson | Mar 29, 2016
Flood insurance rate increases in the mid-single digits are expected to roll in Friday (April 1), but two Florida congressmen are seeking a last-minute reprieve for home and business owners.
U.S. Representatives David Jolly and Gus Bilirakis introduced the Flood Insurance Rate Increase Suspension Act, which would delay the scheduled rate increases and hikes in policy surcharges administered through the National Flood Insurance Program by a year.
In introducing the bill, Jolly urged the Federal Emergency Management Agency – which oversees NFIP – to hold off on rate increases while it’s still “figuring out its agenda” with regard to the flood program.
“The goal of previous reform measures was to create a market for more competitive rates, and in fact lower rates, based on improved mapping and improved data,” he said Monday. “Unfortunately, the FEMA re-mapping process remains ongoing and government data on properties is still not fully being provided to private insurers who could write policies to compete with [NFIP].
“Homeowner should not be subjected to a price increase for flood insurance simply because the federal government hasn’t honored its job to create a more competitive market,” he continued.
Bilirakis added his voice of supporting saying he had witnessed “firsthand the plight of homeowners and businesses who were victims of flooding in my district.”
“These people need our support and protection,” he said. “We must ensure that the National Flood Insurance Program conducts its rate calculations through an open and transparent process. This legislation will prevent unnecessary price increases that would impact thousands of individuals and families while Congress works on a permanent solution to the problem.
“We need to keep insurance rates affordable to protect those who need it most.”
The legislation was sent to the US House Financial Services Committee for its consideration.
If the bill is not passed, rate increases estimated at an average 9% for homeowners and up to 25% for non-residential business properties will be implemented April 1. There will also be increases in surcharges and other fees associated with the program.
Keith Brown, chief executive with Aon’s National Flood Services, told Insurance Business America the rate increases represent a good opportunity for agents to help clients explore private market options for flood risk.
“There’s a natural touchpoint here and more and more options out there for the agent and the policyholder,” Brown said. “It’s maybe a good point to start talking about private options and additional coverages.
“NFIP is one size fits all with very little distinction among different consumers. The private option, while it won’t cover everything, provides solutions for pockets of consumers they have had before. And, as FEMA moves to more actuarially sound rates, it’s just going to increase private market interest.”
