Private Flood Insurance Support Bill Now In Senate Hands

May 03--A bill aimed at encouraging more private companies to offer flood insurance passed the U.S. House of Representatives by a unanimous 419-0 vote last week, and now the wait begins to find out whether the Senate starts moving on a similar bill.

Called the Flood Insurance Market Parity and Modernization Act, the bill is that rarest of animals in the House -- widely supported by Republicans and Democrats and by a broad coalition of environmental organizations, insurance lobbying groups, taxpayer groups and real estate interests.

The House version was introduced in June 2015 by Rep. Dennis Ross, R-Lakeland, and co-sponsor Patrick Murphy, D-Jupiter.

If enacted, it would clear the way for lenders to accept private flood insurance policies that provide coverage at least as good as those sold by the National Flood Insurance Program, which sells the vast majority of flood insurance in the U.S. All homes in high-risk flood zones with mortgage loans backed by the federal government, such as Freddie Mac or Fannie Mae, must carry flood insurance.

The bill also clarifies that private flood insurance can be issued by any company approved to sell insurance within a state where the insured building is located, including regulated and unregulated companies.

Supporters say expanding private flood insurance will lead to improved coverage and lower prices.

Expanding the private flood insurance market nationally was a goal of the Biggert-Waters reforms enacted in 2012. The National Flood Insurance Program was drowning in $24 billion in debt after a decade of weather catastrophes, and Congress was determined to reduce the program's risk load.

But some lenders interpreted that law as saying that private flood insurance plans had to be approved by banking regulators, said Jenn Fogel-Bublick, a lobbyist for SmarterSafer.org, a coalition that supports reforming the National Flood Insurance Program.

"Essentially this is a clarification that lenders can accept private flood insurance without any further regulation," Fogel-Bublick said Monday.

SmartSafer says the measure is supported by Sierra Club, National Wildlife Federation, National Taxpayers Union, Taxpayer Protection Alliance and the National Association of Realtors.

Dave DeMott, president of Plantation-based Gridiron Insurance, said the clarification is necessary. Gridiron started offering private insurance backed by Lloyds of London in 2014 but "we had several occasions where we saved the insurer over 20 percent (compared with the National Flood Insurance Program) and the bank forced the insured to place coverage with the NFIP."

Florida, with about 35 percent of all National Flood Insurance Program policies, is seen as a testing ground for efforts to establish private coverage with broader, better plans. In recent years, a handful of companies have begun offering standalone flood policies, including HCI Group's Homeowners Choice and a sister company formed this year, TypTap, which allows customers to buy flood policies online without having to speak with an agent.

Kevin Mitchell, vice president of investor relations for HCI Group, said the companies' flood insurance venture is off to "a strong start"

Even though the HCI companies have had no problem persuading mortgage lenders to accept its flood policies, HCI supports legislation that helps to improve the private flood insurance market, Mitchell said Monday. "From our standpoint, we welcome the competition," he said. "We need multiple competitors to truly develop a market."

Supporters hope the unanimous vote in the House persuades the Senate to move quickly, Fogel-Bublick said. The Senate version of the bill, co-sponsored by Dean Heller, R-Nevada, and Jon Tester, D-Montana, has been awaiting a hearing by the Senate since its introduction on June 25. Currently it's in the Committee on Banking, Housing and Urban Affairs with no debate scheduled.

"Nothing is easy to get across the finish line in the Senate," Fogel-Bublick said. "Our hope is the Senate just takes it and passes it. But we understand if it has to go through the process."

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