Insight and Intelligence on the London & International Insurance Markets 22 Oct 2017
Lobbyists push flood reforms as Louisiana crisis continues
- 25 August 2016
Lobbyists including industry trade bodies are continuing to push Washington for disaster policy reforms, including the fast passage of legislation aimed at opening up the private market for flood insurance.
E&S trade organization Napslo told this publication that catastrophic storm events such as the Louisiana flooding have contributed to the growing deficit of the beleaguered National Flood Insurance Program (NFIP).
"We continue to advocate for passage of the Flood Insurance Market Parity and Modernization Act by the Senate, as it passed in the House, because it expands the availability of private market solutions for consumers and begins to shift the exposure from the federal balance sheet to private market," said Napslo executive director Brady Kelley.
"We also believe that insureds benefit from access to those alternatives," he added.
Meanwhile, SmarterSafer.org, a coalition that includes insurance interests, said that rather than focusing only on recovery after a major weather event, Congress should target efforts at mitigating losses in the first place.
These would include measures to encourage resiliency such as updating building codes, maintaining and rebuilding natural barriers, elevating homes and making sure that rebuilt areas can withstand major flooding in the future.
"Additionally, more than 60,000 homes have been damaged, and those without flood insurance may face an uphill battle to rebuild.
"It is important that Congress pursue reforms to ensure that homeowners in flood prone areas understand their risk and are encouraged to purchase insurance either through the private sector or the NFIP - while also ensuring that FEMA undertake better mapping and risk analysis," said the organization.
And it called for the quick passage of the same legislation advocated by Napslo to remove barriers to people purchasing cover through the private sector.
Although Louisiana has the third highest number of NFIP policies in force, flood insurance penetration is still relatively low, particularly in the lower risk flood zones impacted by the events of this month.
That will mean a heavy burden for the NFIP - already $23bn in the red - but also for FEMA through federal disaster grants.
In a note as the flood waters continued to rise, cat modelling firm RMS commented: "The event stresses the importance of understanding what, if any, flood coverage is included in a standard homeowner policy, and serves as yet another warning to those considering dropping or forgoing flood insurance.
"Relying on historical record or experience alone can create a false sense of security for anyone trying to understand their flood risk."
- Login Free trial