Private flood insurance bill rolls, with dissent on unregulated prices

A bill designed to boost Florida’s private alternatives to federal flood insurance cleared an early stop Tuesday, though not without a bit of protest and unease about moves that whisk away price regulation.

State Sen. Jeff Brandes

State Sen. Jeff Brandes

Sen. Jeff Brandes, R-St. Petersburg, told the Senate banking and insurance committee the idea was to encourage “alternatives to costly federal insurance.” It passed 8-1.

SB 420  lets private companies set flood rates until 2025 without the normal process of state approval and opens the door more widely to “surplus lines” companies whose rates are not regulated by the state and whose claims are not covered by a state fund if they fail.

“I commend what you’re trying to do,” said Sen. Gary Farmer, D-Fort Lauderdale. “But I just can’t support growing the surplus lines industry any more.”

It represents “unregulated insurance,” Farmer said.

Florida has the most flood policies in the nation, most of which come from the federally-run National Flood Insurance Program.

But private agents and companies are not totally uninvolved. They can act as middlemen who administer NFIP policies under a “write your own” program, and a government watchdog report says the program still does a terrible job of justifying the hefty fees private partners can take.

Private agents and insurance companies have pocketed about one in three government flood premium dollars to sign up people and administer policies — while assuming no risk, The Palm Beach Post has reported. Congress’s Government Accountability Office has questioned about $10 billion in such fees since the 1980s.

“The Federal Emergency Management Agency has yet to revise its compensation practices for Write-Your-Own companies to reflect actual expenses as required by the Biggert-Waters Flood Insurance Reform Act of 2012,” a GAO report released in December said.

 

 

 

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