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Expansion Of Private Flood Insurance May Get Extra Review

flooded car
Marc Averette
Wikimedia Commons

TALLAHASSEE (The News Service of Florida) — As thousands of coastal residents worry about higher flood-insurance rates, an effort to attract more private insurers to offer flood coverage in Florida may go back to the start of the Senate review process.After concerns were expressed by several senators on Thursday about technical changes in the Senate proposal (SB 542), sponsor Jeff Brandes, R-St. Petersburg, said he will meet with Senate Banking and Insurance Chairman David Simmons, R-Altamonte Springs, to discuss whether the revisions need another review from Simmons' committee.

"This is an attempt to open this market, there's obviously going to be to be a lot of questions … we're going to make sure all of our senators understand this policy going forward," Brandes said after the hearing. "The upside for us is that (the legislative) session doesn't start for another two weeks."

The Banking and Insurance Committee on Jan. 8 supported the proposal, which is the state's reaction to increased rates under the National Flood Insurance Program.

On Thursday, the Senate General Government Appropriations Subcommittee agreed not to oppose the changes to Brandes' measure.

But the nature of the changes drew subcommittee members Jack Latvala, R-Clearwater, and Nancy Detert, R-Venice, to say that such "dramatic" alternations should be made in a committee where staff has a better understanding of the proposed changes.

"I'm a little concerned about basically a strike-everything amendment being made in a committee not expert on the subject matter," Latvala said. "I'm not sure this is the way we want to do business."

Brandes' proposal is intended to provide "flexibility" to homeowners now covered through the National Flood Insurance Program and to open the Florida market to companies offering flood coverage.

Among the changes added or redefined on Thursday: Homeowners would be able to negotiate rates without private carriers needing the state Office of Insurance Regulation's consent; commercial coverage would be excluded; and flood coverage could be limited to the principal building or the amount of a property owner's outstanding mortgage.

Also, rules would be eased for surplus-line carriers, which offer higher risk alternative types of coverage to people who can't get standard coverage and whose claims are not guaranteed by the Florida Insurance Guaranty Association if a company goes bankrupt.

The changes to Brandes' proposal came two days after the U.S. House rejected the latest attempt to delay most of the rate hikes in the National Flood Insurance Program for four years.

Gov. Rick Scott issued a statement Wednesday saying he was disappointed with the Republican-dominated U.S. House and saying that "President Obama needs to act immediately to undo these outrageous flood insurance hikes he forced on Floridians."

Real-estate and business leaders have claimed there could be a potentially cataclysmic hit to the state's real-estate market as rates go up because of changes approved in the federal 2012 Biggert-Waters Flood Insurance Reform Act.

Florida accounts for about 2 million policies in the federal program, with state staff estimating that about 268,500 policies receive subsidized rates.

Some properties, primarily in the Tampa-St. Petersburg and Southeast Florida markets, have been projected to face the biggest hikes as the rates in the federal program are made actuarially sound.

While there have been examples of some homeowners seeing rates go from $4,000 to $40,000, Detert questioned if the Senate proposal will actually bring affordable rates for those homeowners.

"If you open this to more agents to sell flood, it may reduce the cost from $40,000 to $38,000," Detert said, "but that original buyer was still used to $4,000."

Latvala said Biggert-Waters is an example of how laws and regulations get approved without the proper reviews, as he emphasized a desire for further analysis of the state proposal.

"Biggert-Waters is an example of how a major piece of legislation, that is impacting hundreds of thousands of lives, was passed that dramatically impacts our state," Latvala said. "All but one member of our congressional delegation voted for it, because they didn't know what was in there."

Former U.S. Rep. Connie Mack cast the only vote in the House from Florida against the 2012 bill, which eventually made it through the Senate as part of a larger negotiated measure that included student-loan interest rates and BP oil spill money.