Flood Proposal Advances
The Senate Banking & Insurance Committee has advanced a bill intended to encourage private market flood coverage in Florida. The bill would allow insurers to offer flood coverage as stand alone policies or as endorsements to existing policies. At a minimum, the flood policies would have to include the deductible options available from the National Flood Insurance Program. Coverage could be provided on an actual cash value basis or replacement cost. Insurers could limit coverage to a principal building, and coverage could be written at amounts less than the replacement cost (such as the amount of the mortgage on the property). The bill specifies that the declarations page must disclose the deductibles and limitations applicable to the flood coverage.
The bill also would amend Florida’s rating law (section 627.062) to specify that proposed rates may include prospective flood losses, if applicable. The losses may be estimated using a computer model or an average computer models as long as the models are determined to be acceptable or reliable by the Florida Commission on Hurricane Loss Projection Methodology.
The bill also expands the number of appointees the Chief Financial Officer may make to the modeling commission from five to seven. The additional members would be a licensed professional engineer specializing in floodplain management and a meteorologist who specializes in flood. The scope of the modeling commission’s authority also would be expanded from adopting models or outputs for hurricane losses to also include flood losses.
The legislature is expected to continue discussing flood insurance issues as the 2014 session approaches due to concerns with the impact on the real estate market if NFIP rates go up as provided in the Biggert-Waters Flood Insurance Reform Act of 2012.