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Sunday, Apr 22, 2018
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Can state lower flood insurance rates? No one knows

TALLAHASSEE — Not everyone will see significant cost savings from private flood insurance, but a measure already moving in the Legislature should help those facing the most “egregious” rate increases, the bill’s sponsor says.

Sen. Jeff Brandes, R-St. Petersburg, is pushing a bill (SB 542) that would enable more private insurers to write flood insurance policies in Florida.

It cleared its first committee hearing last week with a unanimous vote. Lawmakers already are meeting in committees in preparation for the state’s annual 60-day legislative session, which starts March 4.

State lawmakers are acting after Congress failed to tamp down flood insurance increases in the National Flood Insurance Program. Hurricane Sandy caused massive claims that drained the fund’s reserves.

But no one is promising that private insurance will be a solution.

Brandes’ bill is “about promoting competition, and “competitors in markets will have different prices,” said Bradley Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers.

Private insurers don’t have the historical risk information that the feds do, he said in an email, so they can’t yet gauge prices.

Locke Burt, president of Security First Insurance and a former state senator from Ormond Beach, said the private sector won’t step in unless they figure out a way to make money.

“If you’re in the insurance business and you can make even a nickel out of every dollar, that’s OK,” he said in an interview. “People are looking at this and saying they’ll talk about it, but first tell us what the rules are.”

Insurance is a heavily regulated industry, with caps on charges, which means the state will need to rewrite its insurance rulebook before companies can even think about how to write those policies.

Brandes believes private insurance will cost less. One reason: The federal program is “trying to backfill a $24 billion hole that the private market will not have when it starts out in this line of insurance,” he told The Tampa Tribune.

The Biggert-Waters Flood Insurance Reform Act would increase premiums for more than 15,000 households in St. Petersburg alone, much of which is located in flood zones.

The repeated example has been a Florida coastal home bought in August 2012 that pays a yearly premium of $500. That premium will soon rise to $4,500 after rate increases. Other premiums could increase three to ten times what they were.

Some homeowners would pay so much in insurance premiums alone, it would be the equivalent of paying off their home every 5-7 years, even though they haven’t had a flood in 40 years, Brandes said.

“We don’t know what a private market rate will be because there hasn’t been one for 40 years,” he said. “To find out, we need private (companies) to come in and provide a price.”

Brandes’ bill would:

Give companies the ability to offer a range of coverage options, such as excluding a garage or only insuring up to the remainder of a mortgage.

Expand a commission that regulates policy rates for storm risk to add flood experts.

Offer guidance for the Florida Office of Insurance Regulation to help companies get a quick review and approval for writing policies.

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