Monday, December 11, 2017
Business

John Romano: Flood insurance bill is a good start, but it's not enough

Senate Bill 542, approved and forwarded by the banking and insurance committee on Wednesday, begins simply enough:

"An act relating to flood insurance … "

What follows are about 3,500 more words, a bunch of numbers, a handful of semi colons and one simple message:

Help!

The bill, proposed by Sen. Jeff Brandes, R-St. Petersburg, is essentially a plea for private insurance companies to set up shop in Florida. Sort of legislative flirting, if you will.

Regulations? We'll relax them. Experts? We'll hire them. Premiums? We'll pay them. FEMA and the National Flood Insurance Program? We'll leave them.

This is a proposed coupling between desperation and opportunity. And in case you were confused, we're the desperate ones.

The idea is that the federal rates have become so warped that private companies might be enticed into writing their own policies if the state gives them the flexibility to reduce their risk by offering somewhat limited coverage.

"If we can get them to come in and compete for policies, this can be a win-win situation for us all," said Rep. Larry Ahern, R-Seminole, who is expected to file a companion bill in the House on Friday.

That, of course, is the hope.

The reality is more challenging.

Elected officials probably have the motivation and momentum to get the bill passed early in the upcoming legislative session, but that does not mean insurance companies will drop their indemnities and come running.

Or have you forgotten how the Liberty Mutual and Allstate crowd bailed on homeowners policies throughout Florida a few years ago?

"This bill is definitely a step in the right direction," said Jake Holehouse of Holehouse Insurance. "But it's only about 10 to 15 percent of the work that needs to be accomplished. If the Legislature stops at this bill, we're all going to be disappointed."

The problem is the feds have had a virtual monopoly on flood insurance policies in Florida the past few decades. They have the pertinent data, they have the maps and they seem to have very little interest in sharing.

That means Florida might have a hard time selling itself to private insurers who are going to want more details before exposing themselves to potential losses.

The Brandes bill attempts to address that issue by creating a regulatory framework that would include a flood plains engineer and a meteorologist who specializes in floods. But considering FEMA has about a 35-year head start on data, it's hard to imagine that a couple of experts could have the state figured out by, oh, April.

It's more likely that the state will have to invest a hefty sum in creating its own flood zone database in order to entice private insurance companies.

Is that realistic? Perhaps, but not in the short term.

That means you might want to keep an eye on Washington, D.C., to see if lawmakers from Florida and other affected states can throw a body block in front of the Biggert-Waters Act. That legislation, which became law in October and eliminated federal flood insurance subsidies, still has a lot of supporters among the austerity crowd.

The U.S. Senate is expected to vote next week on a bill that would delay Biggert-Waters for several years or until FEMA completes an overdue affordability study. Getting the House to go along could be iffy.

So, yeah, it's a good thing Florida lawmakers are not waiting on Congress. And it's a good idea to woo private insurers. Just don't be surprised if they play hard to get.

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