Property/casualty insurers are throwing their weight behind NAIC proposals that includes long-term reauthorization of the National Flood Insurance Program and also an expanded private market that would function alongside the federal option.
The National Association of Insurance Commissioners will discuss a number of recommendations to reform and reauthorize the NFIP when the trade association meets for its August 28 summer national meeting in San Diego. Among the objectives put forth by regulators: support for a long-term program reauthorization, encouragement of greater growth in the private market and also support for mitigation planning, legislation and support to reduce losses.
Don Griffin, vice president of personal lines at the Property Casualty Insurers Association of America, said that the NAIC and state regulators are on the right track in terms of pursuing a long-term flood insurance program reauthorization and ways to spark growth in the private flood insurance market. The current National Flood Insurance Program expires in September 2017.
“PCI applauds the NAIC and state regulators for continuing the conversation about flood insurance and understanding the importance of a long-term NFIP reauthorization, as 5.1 million consumers and businesses rely on the program for protection from the devastation that floods can bring,” Griffin said in a recently-issued statement.
He also noted that the NAIC recommendations “encourage greater growth in the private flood insurance market as a complement to the NFIP to help provide consumers with more choices.”
Griffin said that regulators, legislators and the industry must develop a bipartisan consensus in order to achieve “stable long-term” reform before the Sept. 2017 NFIP expiration. This option, he said, would “protect families and businesses that depend on flood insurance.”
Not everyone agrees that opening U.S. flood insurance to provide insurers would spark major growth in the private flood insurance market.
In June, a Standard & Poor’s report concluded that allowing private insurers to more easily access the U.S. flood insurance market would lead to a trickle of new players rather than a flood.
Standard & Poor’s said that private insurers would face a number of challenges in underwriting, modeling and pricing flood risk before they could more fully jump into the flood risk market and be comfortable with the risks.
A.M. Best, on the other hand, said that “there are benefits to be gained” from expanding the flood insurance market to include more private insurers, such as increasing consumer choice.
Source: Property Casualty Insurers Association of America