Call for a private insurance market for those seeking flood protection has been issued
Homeowners in the United States may soon have an alternative to the National Flood Insurance Program. For many years, the federal program has been the only place where homeowners could find flood protection. The problem, however, is that the program has been crippled by serious financial problems that have prevented it from performing its duties effectively. The program has also been embroiled in legal issues concerning the way it has handled insurance claims associated with 2012’s Hurricane Sandy.
New legislation aims to help develop a private flood insurance market
Representatives Dennis Ross and Patrick Murphy are sponsoring new legislation that would foster the creation of a private flood insurance market, which would offer property owners coverage that is not associated with the National Flood Insurance Program. The legislators have been working on the legislation for more than a year and believe that it would reduce the financial burden that the federal program has on the government and consumers alike.
Federal law may require clarification that will allow insurers to provide flood protection
According to federal law, regulated and insured lenders are must require flood insurance protection on mortgages that they provide, particularly in properties are located in high-risk flood areas. The legislation from Representatives Ross and Murphy will clarify federal law, allowing private insurers to provide coverage as well, which will help establish a private market through which homeowners may be able to find less expensive coverage.
More options would create greater competition, which could have a positive impact on insurance premiums. If the National Flood Insurance Program is unable to effectively handle the needs of consumers, they will be able to find the coverage that they need elsewhere, effectively abandoning the federal program in favor of better alternatives. The legislation has found some support among federal lawmakers, as it appears to be an effective way to address the financial issues associated with the federal insurance program.
