A Florida-born solution for addressing flood insurance issues

 

Published in TCPalm.com on August 26, 2015
As South Florida residents know all too well and Tampa residents found out this month, this is the time of year that we may experience heavy flooding due to a combination of heavy rain, low elevation and inadequate infrastructure. With scientists warning of impending doom due to sea level rise, it is critical that local and state leaders put in place the proper amount of mitigation to plan for the future.

We can do this.

The Miami Herald reported last month that Florida has more private property at risk from flooding linked to climate change than any other state, with $69 billion in coastal property at risk of flooding at high tide by 2030, maybe sooner. That climbs to $152 billion by 2050, according to a recent report.

The advocates of Stronger Safer Florida have worked for years to push state leaders to reduce the number of high-risk coastal properties insured by Citizens Property Insurance in order to avoid the possibility of post-hurricane assessments. We also support measures to plan for the increased risk of flooding, and our recommendations include stronger building codes, the elimination of subsidies for coastal development and better protection through the use of natural defenses and available and customizable flood insurance.

Earlier this year, state Sen. Jeff Brandes pushed through legislation and Gov. Scott signed into law language that would improve coastal development standards and provide consumers additional choices regarding flood insurance protection. The law provides consumers the option of flexible flood insurance, which specifies coverage amounts and options of what is and isn’t covered by a policy.

Federal lawmakers are bringing the issue to Congress.

Two members of the U.S. House from Florida — Patrick Murphy and Dennis Ross — have filed The Flood Insurance Market Parity and Modernization Act. We think it’s a good thing for Florida and our country. The bill authorizes equal treatment of the National Flood Insurance Program and private flood insurance, allows for private flood insurance for the remaining principal on the mortgage instead of the full value of the mortgage and allows consumers to switch between private and federal insurance without penalty. These options must be approached with care because we do not want underinsured homeowners asking for additional taxpayer help, and we want to discourage rebuilding in high-risk areas.

Informed consumer choice is always important, especially when dealing with insurance. The act seeks to improve the private flood insurance market, removing federal restrictions that don’t allow locally specific options and solutions for coverage. NFIP has implemented some steep rate hikes and revised flood maps, with the intention of making the cost match up with the actual risk. But this may lead to problems for homeowners, whether it is because the maps or values are wrong, or because the cost is simply too high.

We recognize that it is too risky to live in some places, and the cost has to rise, but perhaps the program needs to move more slowly to avoid the rate shock and should look at market solutions for help.

And as the effects of rising seas and flooding intensify, we will need to take steps to mitigate the problems before they cripple our economy. Major flood claims could have the same effect on Florida’s consumers as a season of hurricanes. It’s something that local and state leaders must address through improved building codes and the reduction of insurance and other subsidies for coastal development. The act also will give more power to state insurance agencies, which know their states better than federal regulators. It will allow for specifically tailored policies based on local factors.

Choice and competition are a consumer’s best friend, and in the arena of insurance, this Florida-born solution should be supported by Sunshine State residents and business owners.

Poorly constructed federal regulations and problems with the NFIP necessitate the move to increased private market solutions. Consumers should have more choices and fewer penalties for exercising those choices. This legislation is a win-win for consumers and a big win for Florida.

Bill Newton is deputy director, Florida Consumer Action Network.