Assemblyman proposes the establishment of a state-run insurance program
New York may have a solution to the flood insurance problem: Abandoning the National Flood Insurance Program. Early last year, Assemblyman Phil Goldfeder proposed a plan to create the state’s own flood insurance program, free from the control of the federal government. The plan had received relatively little support in its early days, but now Goldfeder is pushing to make this initiative a reality. A state-run program could have serious implications for flood insurance coverage in New York.
Federal program continues to struggle under crippling debt
Some states have been considering opening their flood insurance market to private companies, hoping such a move would remedy the problems they have with the federal insurance program. The National Flood Insurance Program has been crippled by major financial issues for several years, which triggered rate hikes for those that received coverage through the program. These rate hikes proved problematic and were halted for a time, but this did little to improve the program’s financial faults.
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State-run flood insurance program could provide coverage for homeowners that need it the most
Assemblyman Goldfeder has introduced legislation that would create a state-run insurance program in New York, called the New York Flood Insurance Association. The program would be designed to support those living in flood-prone areas an opportunity to protect their properties. The issue, however, is that the program will require a great deal of funding before it can take form and offer coverage. There is also no guarantee that insurance companies will provide coverage through the state’s program.
New York may not have the financial clout to ensure that insurers participate in a state-run program
One of the reasons insurers are willing to participate in the National Flood Insurance Program is because it limits their financial exposure to natural disasters. Though the federal program is in financial distress, insurers still have a line of protection against the risks they face in providing homeowners with coverage. A state-run program may not have the financial capabilities to offer the same degree of protection for these insurance companies.