TALLAHASSEE — The Florida Legislature took the first step toward creating a private alternative to the National Flood Insurance Program on Wednesday, as a Senate committee unanimously approved a bill to create a framework for a regulated Florida product.
The proposal, which passed the Senate Banking and Insurance Committee, has been put on the fast track in the Senate, which wants to jump-start the private market by allowing companies to offer homeowners alternatives to the flood insurance now available only through the federal government.
"This bill provides choices for consumers to fit their individual circumstance," said Sen. Jeff Brandes, R-St. Petersburg, sponsor of the bill.
For example, consumers would have the option of covering either the outstanding balance of their mortgage, the replacement cost of their property, or the actual cash value of their property, rather than a single policy now available under the national program.
Under the Biggert-Waters Flood Insurance Reform Act of 2012, premiums were required to rise to reflect the true flood risk, forcing rate increases of at least 20 percent for the policyholders across the nation and much higher for homeowners in older homes that had benefitted from subsidized rates for years.
Because nearly 37 percent of all policies written by the national program are in Florida, there are an estimated 268,500 homeowners who will lose their subsidized rates, sending a chilling effect on the housing market, particularly in Pinellas County, where rates have risen as much as 900 percent.
The Senate bill sets in motion the option of a private market, but there is no guarantee that new companies will enter the market and there is no assurance they will offer lower rates.
"So you could have more companies offering the same exorbitant rates, and then who have we helped?" said Sen. Nancy Detert, R-Venice. She said she was encouraged by the proposal but warned there are no guarantees it will work.
A bipartisan coalition of Republicans and Democrats in Congress this week proposed legislation to delay the effective provisions of the bill by as much as four years, but Brandes said even if Congress delays the implementation, Florida should adopt his legislation.
"Hoping that Congress is going to act is not a strategy," Brandes said. "A delay will allow the rest of the insurance market to catch up."
At least one company, Tampa-based Homeowners Choice Property & Casualty Insurance Co., has received approval from state regulators to offer flood insurance coverage to Florida policyholder.
Under the bill, policies would have to provide at least as much coverage as that provided by the national program and disclose to consumers what the policy will not cover. Optional coverage would be available for additional living expenses, personal property and contents, and law and ordinance coverage.
A similar measure is being proposed in the House by Rep. Larry Ahern, R-Seminole.