(Lewisburg, PA – Insurance News and Markets) – In late August, Acting Insurance Commissioner Jessica Altman urged Congress to include provisions specifically supporting private market residential flood insurance in the reauthorization of the National Flood Insurance Program (NFIP), set to expire on September 30.
“The Wolf Administration has been educating homeowners, renters and condo owners concerning private market flood insurance options for the past year and a half, and has found in many cases that comparable private coverage is much more affordable than what is available through the NFIP,” Acting Commissioner Altman told a group of nearly 100 residents in Lewisburg, Union County. “I encourage consumers to visit our one-stop-shop flood insurance webpage, where we list insurers and agents selling private flood coverage in Pennsylvania. After that, it’s a good idea to make some calls to see if a better deal is available for them in the private market.”
In the first year that the Pennsylvania Insurance Department flood insurance webpage included private options, nearly 3,300 policies were issued, which is more than double from previous years.
The NFIP was created in 1968 to provide flood coverage for high-risk properties and included significant subsidies for these properties. Huge numbers of claims following Hurricane Katrina and Super Storm Sandy contributed to the NFIP falling $24 billion in debt, and Congress passing a series of laws that are phasing out the premium subsidies over time. The potential impact of Hurricane Harvey in Texas and Louisiana could make this problem even worse. As NFIP premiums rise to approach the cost of insuring the actual risk each property presents, the private market is entering the residential flood insurance market because it can now compete with the NFIP.
“Specifically, we need Congress to make private flood coverage that is comparable to the NFIP acceptable for federally backed mortgages. Lenders need to know this insurance is good coverage and they should accept it,” Acting Commissioner Altman said. “We also need Congress to require the NFIP to allow homeowners to switch to a private policy from an NFIP policy during the policy year, with no penalty, and receive a pro-rated refund of their NFIP premiums covering the remainder of the year. Bottom line, if a consumer finds a better deal they should not be penalized for taking it.”
Altman encouraged state residents to contact their U.S. congressional representative and senators and ask them to include private flood coverage in their NFIP reauthorization bill.
Source: Pennsylvania Insurance Department.