The National Flood Insurance Program (NFIP) is the only safety net for the millions of homeowners and small-business owners — like those suffering from the effects of Hurricane Matthew — who live in flood zones.
The Independent Insurance Agents & Brokers of America strongly supports a long-term extension of this critical program, and our small-business members play a central and essential role in the delivery of flood insurance.
However, modernization of the NFIP in certain respects is necessary and will produce beneficial results for consumers.
For example, Congress should consider ways to promote and incentivize mitigation efforts, update and streamline the mapping process, encourage greater consumer takeup rates, and address affordability concerns.
Congress has to be careful not to go too far in its “privatization” of the coverage. Currently, the private market does not have the capacity nor desire to underwrite this risk on a widespread basis to meet customer needs. However, there are ways to begin to incentivize private carriers to increase their presence in the market.
One way is through passage of legislation that would explicitly allow private flood insurance to satisfy any NFIP continuous coverage requirements. This important legislation would ensure that policyholders can return to the NFIP without losing their grandfathered status or subsidy if they had left the program and obtained coverage in the private market and that coverage no longer meets their needs.
This is an important safeguard for consumers and small businesses. This bill passed the full House unanimously in April, but it still awaits Senate consideration.
IIABA supports a reformed and modernized NFIP, and believes that the private market has a role to play as a complement to the NFIP but not as a replacement to the program. Flood insurance must be available and affordable to those who need the coverage.
Privatization would result in major marketplace disruptions for homeowners, small businesses, and jobs in the real estate market.
Bob Rusbuldt is president and CEO of the Independent Insurance Agents & Brokers of America.