Florida Needs More Affordable Flood Insurance Options
Our state of Florida is no stranger to catastrophic storms and devastating hurricanes. With 98 percent of Florida communities participating in the federal National Flood Insurance Program (NFIP), homeowners and business owners know firsthand the importance of purchasing flood insurance to protect their families and businesses from disaster.
In 2014 alone, and to no surprise, Florida surpassed all other states in total number of insurance claims and total claim payments for flooding. Furthermore, out of the top 10 claiming states, Florida’s total number of claims was more than three times higher than the average, and its total claim payments were more than four times the average.
However, we are not alone in our risk exposure to floods. Every property faces some type of flood risk. In fact, in the past five years, all 50 states have experienced floods or flash floods. To insure against these serious risks, property owners have one choice: the NFIP. While the NFIP has served a critical role, providing an option in a market that was without one, recent reforms have left Floridians looking for other options. Choice and competition in a robust and appropriately regulated marketplace will drive down costs and better meet the needs of consumers.
This is not a partisan issue. It is a practical matter.
Because federal flood insurance is the main game in town when it comes to determining rates and providing insurance, consumers are left with very few options to insure against flood losses to their homes or businesses. For instance, an NFIP policy only covers up to $250,000 of damages related to a residential home. Also, NFIP policies do not cover homeowners’ living expenses, such as temporary housing, if they are displaced by a flood. In the case of a business, NFIP policies do not provide coverage for financial losses suffered as a result of a flood.
While the NFIP is limited in what its policies can cover, the private sector is not.
The private sector is also in a better position to provide stronger incentives for property owners to invest in mitigation and resiliency. Ultimately, this increased emphasis on mitigation will benefit homeowners, business owners and taxpayers alike.
Floridians and all Americans across the country would greatly benefit from more choices when it comes to flood insurance policies. Private competition in this market will lead to greater innovation and more affordable and comprehensive policies for consumers.
Expanding options and driving down costs of flood insurance for homeowners and business owners have been some of my top priorities since I was elected to represent the Sunshine State in our nation’s capital.
When I learned that unnecessary regulations were preventing the development of a private flood insurance marketplace, I teamed up with Rep. Patrick Murphy to solve this problem, introducing H.R. 2901, the Flood Insurance Market Parity and Modernization Act. This bipartisan legislation will remove the barriers that are hindering consumers’ flood insurance options.
This legislation is a win-win for Florida families, giving them more options for flood insurance coverage and using new competition to drive down the prices of plans. Also, it preserves protections for property owners who choose to leave the NFIP for the private market and wish to return.
For example, under the current rules, if a policyholder were to leave the federal program for any reason, including leaving to try the private market, that policyholder would lose any subsidy status they previously held with the NFIP should the policyholder choose to ever return to the NFIP. The policyholder must maintain “continuous coverage” with the NFIP in order to maintain grandfather status. This bipartisan legislation would change these rules to allow private flood insurance policies approved by a state regulator to count as “continuous coverage” by the NFIP.
Ultimately, the consumer will benefit from increased competition and options in this market and, with Florida property owners in mind, I have been proud to work with Rep. Murphy in a bipartisan manner to move this important legislation through the House Financial Services Committee with an overwhelming vote of 53-0.
Moving forward, I will continue to press for this legislation to be enacted into law so Floridians and all Americans are empowered with more choices and affordability in the flood insurance market.