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Legislators launch plan to create flood insurance option

The Florida Legislature took the first step toward creating a private alternative to the National Flood Insurance Program on Wednesday, as a Senate committee unanimously approved a bill to create a framework for a regulated Florida product.

The proposal, which passed the Senate Banking and Insurance Committee, has been put on the fast track in the Senate, which wants to jump-start the private market by allowing companies to offer homeowners alternatives to the flood insurance now available only through the federal government.

“This bill provides choices for consumers to fit their individual circumstance,” said Sen. Jeff Brandes, R-St. Petersburg, sponsor of the bill.

For example, consumers would have the option of covering either the outstanding balance of their mortgage, the replacement cost of their property, or the actual cash value of their property, rather than a single policy now available under the national program.

Under the Bigger-Waters Flood Insurance Reform Act of 2012, premiums were required to rise to reflect the true flood risk, forcing rate increases of at least 20 percent for the policyholders across the nation and much higher for homeowners in older homes that had benefited from subsidized rates for years.

Because nearly 37 percent of all policies written by the national program are in Florida, there are an estimated 268,500 homeowners who will lose their subsidized rates, sending a chilling effect on the housing market, particularly in Pinellas County, where rates have risen as much as 900 percent. Story here.

Read more here: http://www.miamiherald.com/2014/01/08/3859626/legislation-is-fast-tracked-to.html#storylink=cpy


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ed jenkins

The taxpayers have no interest in paying for flood claims of their neighbors who do not understand the risk of building in flood zones and want to be subsidized for this risky behavior. they request that markets set insurance rates and not money to be confiscated from taxpayers to subsidize rates for their neighbors.

Jon Reeder

If you leave it up to the free market crooks I'm sure the rates would be astronomical. Our insurance regulation committee is a useless puppet of the politicians so there would be no help there. This approach is no fix but yet another giveaway to large corporate donors.

ed jenkins

Insurance rates in a properly functioning market may be much higher or much lower that current levels but that is not a concern for politicians. Many citizens who are not as well informed about the insurance industry do not understand that over time insurance companies cannot make any money off their underwriting operations since if they make too much money more competition enters driving prices down and if they make too little companies (and capital) will exit driving prices higher. Virtually all of the profit over time in insurance is from investing premiums between the time that they are received and claims are paid out.

Citizens will benefit over time from a properly priced insurance market even if those prices are higher because adjustments will be made to offset these insurance prices in the price of a home keeping the total cost of home ownership constant. A properly priced market taking all factors including properly priced insurance into account causes home buyers to act more rationally since their losses from flood risk will be considered when deciding how much to pay for a house.

Questions remain

I don't get it... why are Republicans in such a hurry to subsidize property insurance, but not health insurance?

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