A bill sponsored by State Sen. Jeff Brandes providing an independent marketplace framework for Florida flood insurance passed its first significant legislative hurdle Wednesday when the Senate Committee on Banking and Insurance unanimously supported SB 542.
If passed, the bill would allow private insurance companies to issue flood policies, contracts, or an endorsement with a number of possibilities for minimum coverage. The measure would give consumers a variety of coverage options, and an opportunity to reduce costs while insuring property against floods.
“In Washington this week Congress is debating a four year delay to the drastic rate increases to flood insurance from the Biggert-Waters Act,” said Brandes. “We can’t rely on Congress to fix this; instead we must ensure Floridians are protected from egregious rate increases.”
“This legislation puts consumers in charge, and it offers flexibility to families struggling under the burdens of failed federal policies,” the St. Petersburg Republican added.
Brandes hopes to develop a state-based “free market” alternative to the costly federal program.
SB 542 creates a wide range of flexible options for policyholders to choose so they can reach an affordable level of coverage for their property. The bill also allows insurers to establish minimum allowable coverage in Florida, similar to those used by Fanny Mae and Freddy Mac when underwriting mortgages, so Florida policyholders will continue to have access to federal lending and federally chartered banks.
“I applaud Senator Brandes for working toward a positive solution to the staggering increases in flood insurance prices that many Floridians are facing,” said bill co-sponsor Majority Leader Lizbeth Benacquisto. “By allowing for private market flood insurance solutions, Senator Brandes’ bill will provide more options for policyholders that fit their individual needs. The laudable goal of SB 542 is to help keep hardworking Floridians in their homes.”
The plan permits policyholders to have the option of covering either the outstanding balance of their mortgage, replacement cost of their property, or actual cash value of their property. The legislation is the result of extensive work between consumer groups, insurers, the banking industry, and real estate professionals and ensures to protect consumers in the new flood insurance marketplace.
Both private insurance and banking industry leaders applauded Brandes’ initial success.
“The private market has an appetite and interest in underwriting NFIP flood risk,” said Frank Nutter, president of the Reinsurance Association of America in a statement. “I applaud both Senator Brandes and the Senate Banking and Insurance Committee for advancing legislation that would encourage private sector participation in the market.”
“Reinsurers are ready to provide reinsurance protection to those Florida insurance clients which want to write flood insurance,” said Bradley Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers (ABIR) in a statement about the unanimous Senate committee approval.
“Reinsurers have traditionally underwritten flood insurance around the world and have excellent track records in supporting their US commercial and surplus lines clients with flood reinsurance,” Kading added. “The Brandes bill expands consumer choice of insurance products. ABIR members support that effort.”
Tom Feeney, President and CEO, Associated Industries of Florida, also released a statement Wednesday afternoon praising the Senate support for SB542.
“On behalf of Associated Industries of Florida and our members, we applaud the Senate Banking and Insurance Committee for approving SB 542 introduced by Sen. Jeff Brandes,” Feeney said. “This forward-thinking bill will encourage the private market to offer flood solutions to Florida consumers and businesses.
Feeney added that according to the Congressional Budget Office estimates, the federal flood insurance program is nearly $30 billion in debt and may be unable to pay its claims. He applauded SB 542 for giving homeowners and businesses something they a choice to get flood insurance protection from private carriers and with options that match their needs.
“We urge the rest of the Florida Legislature to realize the importance of this good bill, and pass SB 542 during the upcoming 2014 state legislative session,” Feeney said.