Legislation aims to make flood protection a private market rather than something handled by the federal government
Homeowners in Florida are facing rising flood insurance rates that could threaten their financial stability, but state lawmakers may be able to provide some relief through new legislation. The legislation would create a competitive, private insurance market throughout the state. This would take flood insurance out of the jurisdiction of the federal government, allowing private insurers in Florida to provide this coverage to homeowners. State lawmakers believe that this will be beneficial to consumers as the National Flood Insurance Program may no longer be able to provide the coverage that homeowners need.
NFIP continues to struggle with massive debt
The federal insurance program has struggled to sustain itself beneath massive debt for several years now. Reforms have done little to alleviate the program’s financial problems, but they have make flood protection significantly more expensive for homeowners in many parts of the country. In Florida, some homeowners have seen their insurance rates increase by 400% or more due to reforms targeting the federal insurance program.
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Private market may help keep insurance costs down
Opening up the Florida market to private insurers may be an effective way to keep flood insurance costs down, but whether insurers would be inclined to participate in this private market is suspect. Insurers have been somewhat reluctant to participate in the flood protection sector because of the financial risks it represents. Flood damage can be very costly and difficult to repair. States like Florida are notoriously prone to flood disasters, which could make insurers much less likely to participate in the market.
Homeowners show support for legislation
Exactly how lawmakers intend to encourage insurers to participate in the flood market is not clear. Legislators believe that mitigating the risks that insurance companies would be exposing themselves to would provide adequate incentive for these companies to participate in the private market. Exactly what these incentives would be is unclear at this time, but homeowners have shown support for private flood insurance as a way to mitigate the rising rates of the federal program.