Two New Developments Hold Promise for the Private Flood Insurance Market

• Published date: 01 March 2019
• Author: Lisa Miller
• Date: 01 March 2019
• DOI: http://doi.org/10.1111/rmir.12117

Risk Management and Insurance Review

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Risk Management and Insurance Review, 2019, Vol.22, No. 1, 7-13

DOI: 10.1111/rmir.12117

INVITED ARTICLE

TWO NEW DEVELOPMENTS HOLD PROMISE FOR

THE PRIVATE FLOOD INSURANCE MARKET

Lisa Miller

“Withever increasing NFIP rates, it’s only natural that a private market should relieve

some of NFIP’s lower-risk portfolio. With the NFIP in debt to the tune of nearly $21

billion, shifting risk appropriately to the private market is both smart public policy

and increases the availability and affordability of flood insurance for consumers.”

Lisa Miller

Recent news that federal financial regulators have adopted a final rule compelling

lenders to accept private flood insurance, together with a renewed effort to adopt a

model flood insurance law for all states to encourage a private market, bodes well for

consumers and the growing private insurance sector. Not only will these developments

create moreavailable and affordable flood insurance options, but they will also shift more

risk onto the private market and away from the federal government’s debt-burdened,

taxpayer-subsidized National Flood Insurance Program (NFIP).

In January, federal financial regulators came to agreement and issued a rule mandating

banks and other lenders accept private flood insurance to satisfy coverage require-

ments. The rule, which becomes effective July 1, should make private flood insurance

more available in flood zones, especially in flood-prone states such as Texas,Louisiana,

and Florida, where NFIP policies dominate.

Under the rule, lenders will have to accept private flood insurance policies if they offer

coverage at least as comprehensive as the NFIP. Lenders will also have an option to

accept private flood insurance policies that don’t offer as much coverage as the NFIP,

which the insurance industry and others have been advocating for several years.

Meanwhile, the National Council of Insurance Legislators (NCOIL) is in serious discus-

sion on model legislation to encourage the development of a private flood insurance

market in all 50 states, based on Florida’s successful example.

NCOIL has formed a Special Committee on Natural Disaster Recovery with the goal

of providing insurance-specific guidance to states across the country in their efforts

Lisa Miller, MPA, CPM, is a former Florida Deputy Insurance Commissioner who served as

an advisor on passage of Florida’s key laws encouraging a vibrant private flood insurance

market. She is CEO of Lisa Miller & Associates, a Tallahassee, Florida-based consulting firm

and host of The Florida Insurance Roundup podcast, phone: 850-528-5229, e-mail: lisamiller@

lisamillerassociates.com

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