Florida Senate passes bill to launch private flood insurance option

The state Senate passes a bill designed to lure private insurance companies into the market.
Published March 26 2014
Updated March 27 2014

TALLAHASSEE — Homeowners could have more flood insurance options than the federally subsidized national program under a measure unanimously passed by the Florida Senate on Wednesday that is designed to encourage private insurance companies to enter the market.

SB 542 by Sen. Jeff Brandes, R-St. Petersburg, would create an alternative to the federal National Flood Insurance Program by authorizing private companies to write insurance that had previously been available only through the federally subsidized program.

The federal program has undergone major reforms in the past year that have sparked hefty premium increases for homeowners in flood-prone areas and those with older homes, whose premiums had traditionally been subsidized.

The outcry over the giant cost increases prompted Congress to enact a stop-gap measure that delays the most expensive changes in the Biggert-Waters Flood Insurance Reform Act, but does not repeal them. The hefty rate increases will be phased in over time.

Under Brandes' plan, homeowners could potentially save money by buying less insurance than is allowed under the federal program, such as insuring their property for only the outstanding value of their mortgage, the property's replacement cost or the actual cash value of the property. The current limits under the federal program are $250,000 for a home and $100,000 for personal property.

The bill also would authorize insurers to offer various deductible amounts and to give home­owners more options for covering contents, living expenses, secondary structures, etc.

The insurance plans would have to be approved by the Office of Insurance Regulation.

"The bill emphasizes consumer choice and will let us control our own destiny in this critical market," Brandes said in a statement. "This legislation makes Florida a national leader in the flood insurance marketplace, and I am grateful to my colleagues for their overwhelming support."

Only a few private companies are currently offering flood insurance in Florida. Tampa-based Homeowners Choice Property & Casualty Insurance Company Inc. began offering flood coverage as part of a homeowners insurance policy in January. The Gainesville-based Flood Insurance Agency also writes policies.

The National Flood Insurance Program writes more flood insurance policies in Florida than in any other state — nearly 37 percent of all policies written by the program are in Florida — and the state is a net loser in the program. Of the $50 billion paid out over the history of the program, only about $3.7 billion has been paid to Floridians.

About 268,500 homeowners in Florida, out of the 2 million federal flood policies written, got the subsidized rates and were subject to the hefty increases. Pinellas County has more subsidized policies than any other county in Florida.

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