Florida Insurance Commissioner Kevin McCarty said Wednesday that his office in the process of developing a “set of simple guidelines” for insurance companies to request approval to write primary flood insurance in Florida as an alternative to the Federal Floods Insurance Program.
“The guidelines will not only provide a framework for the approval of rates and forms for flood coverage, but will also address financial requirements that must be met for insurers to write this new coverage,’’ McCarty said in a statement.
The Florida Office of Insurance Regulation was barraged with questions Wednesday after McCarty’s deputy, Rebecca Matthews, told the Senate Banking and Insurance Committee on Tuesday that OIR was working with companies to help them write primary flood coverage in the state to given them an alternative to paying the massive price increases expected as a result of federal reforms.
The Biggert-Waters Flood Insurance Reform Act of 2012 attempted to phase in a series of rate increases in the National Flood Insurance Program as a way to close the program’s $24 billion deficit. But estimated 268,000 Floridians with older homes in high risk flood zones will lose their subsidized rates when they sell their homes, hitting buyers with triple digit increases in their flood insurance premiums in many cases.
Gov. Rick Scott and Florida's congressional delegation have appealed to Congressional leaders to pass a delay in the rate hikes but, with Washington at a standstill, nothing has happened. Meanwhile, real estate experts say the rate shock on buyers could freeze Florida's slowly-thawing real estate market. They are urging state leaders to come up with an alternative for the nearly 2 million homeowners who now have NFIP policies.
A handful of companies are currently writing primary flood coverage in Florida, but they are generally specialty companies write flood coverage only for high value homes, said OIR spokeswoman Amy Bogner. Insurers can either write the flood policy as a stand-alone flood policy or as an endorsement onto a homeowners policy, she said.
Some of the companies current writing flood insurance include: Chubb (Federal Insurance Company); AIG (Chartis Property Casualty Company); Wright National Flood Insurance Company; Privilege Underwriters Reciprocal Exchange; Firemans Fund Insurance Company; ASI (American Strategic Insurance Corporation); Markel American Insurance Company.
Scott was asked on Wednesday whether he would support policies to make it easier for insurers to provide alternative insurance in Florida but the governor refused to answer and instead blamed President Barack Obama.
"The president signed the bill. He could have an impact by stopping it,'' Scott told reporters. "He needs to put a pause on that bill."