Private flood insurance bill avoids costs of floodplain management

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WASHINGTON — While lawmakers appear eager to help develop private flood insurance as an alternative to the federal program, some are worried that private policies won't help support flood mapping and the enforcement of flood codes.

"We are not opposed to private flood insurance," Chad Berginnis, executive director of the Association of State Floodplain Managers, said in an interview. But "private insurers should be paying a fair share of doing the mapping and supporting floodplain management in this country."

The Federal Emergency Management Agency charges an annual fee on National Flood Insurance Program policies that pays for all of the floodplain management activities in 22,000 communities and roughly half of the flood mapping costs. This current fee fee is $50 for preferred risk flood policies and $25 for renters' policies.

Mapping is fundamental to the National Flood Insurance Program because it shows where flood insurance is a mandatory requirement for homes and other buildings.

"Private insurers benefit by the mere fact that there is a mandatory purchase requirement. It steers business their way," Berginnis said. "But supporters of the private flood bill seem absolutely opposed to our concept of an equivalency fee."

Last week, the House passed a bill that would allow insurance companies to sell private flood insurance policies and provide an alternative to policies backed by the National Flood Insurance Program.

“The recent major flood events across the country have provided a much-needed sense of urgency to our efforts to provide consumers with private sector flood insurance options," Rep. Dennis Ross, R-Fla., said in a press release. "Currently, many homeowners in Florida and across the country face unaffordable flood insurance premiums and a lack of coverage options, largely due to federal regulatory barriers that give the National Flood Insurance Program a harmful monopoly over the marketplace.”

Reps. Ross and Kathy Castor, D-Fla., are co-sponsors of the private flood bill.

Ross' spokesman said in an email Monday that the Congressman had no comment on the flood insurance fee issue. The SmarterSafer coalition, which also supports the Ross-Castor bill, did not return phone calls.

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, also supports the Ross-Castro bill, claiming private insurers will offer more affordable policies and increase awareness of the need for flood insurance protection.

“Wouldn't it be wonderful that for every time you saw a life insurance commercial or an auto insurance commercial, you saw something about flood insurance to help educate the American people about the need for this basic insurance policy?" Hensarling said in a Sept. 28 press release.

But floodplain managers are concerned small or rural communities (with few NFIP policies) might start dropping out of their flood management programs.

"Why should they adopt and enforce floodplain management regulations if private flood insurance is available with no strings attached?" Berginnis said.

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Flood insurance Law and regulation Jeb Hensarling