Private Insurers Slow To Enter Flood Zone
|By Josh Boatwright, Tampa Tribune, Fla.|
|McClatchy-Tribune Information Services|
The panic last fall as federal flood premiums were escalating for many homeowners, especially in the
But with companies investing millions of dollars in new digital technology for modeling coastal storm surge and floods to more accurately assess risk down to individual properties, the long-term prospects for future private market competition are strong, insurers say.
"Where the insurance industry is going is an individual flood risk score for each home based on elevation and construction," said
That will be a gradual process, but the release of state-of-the-art computer modeling programs this fall will give insurance providers a good place to start.
"No pun intended, they're going to put their toe in the water and they're going to see how it works," Burt said.
Although there are roughly 8 million homes in
Those who don't buy flood insurance wrongly assume their homeowner's policy covers it, believe it to be too expensive or think they're not at risk because their property is far away from water.
The theory among some private insurers is that more people would opt to buy coverage if companies came up with more precise risk pricing than the
<p> A bill championed by
The new law encourages companies to develop policies in what's known as the admitted market, which is more heavily regulated, but they would be allowed to set rates each year without state approval until
Since the federal government has set the majority of policy rates for decades, companies will need time to review claim history and new computer modeling data before they decide how to accurately price risk.
"We estimate 20 percent of the federal policies are priced too high," said
There are also matters of federal law that must be resolved, including a bill in
"There's been a lot done to make it as easy as possible for the market to respond. Now it's just a question of whether or not they will, and that remains to be seen," said
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