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October 15, 2013

Florida Looking for NFIP Alternatives

Last week, Florida Insurance Commissioner Kevin McCarty announced that his office is in the process of developing guidelines for insurance companies to request approval to write primary flood insurance in the state. This announcement came just one day after Rebecca Matthews, McCarty’s deputy chief of staff, told the Florida Senate Banking and Insurance Committee that the Florida Office of Insurance Regulation (FLOIR) was in talks with various insurance companies regarding writing primary flood coverage in the state. These developments are in response to continuing concerns about escalating flood insurance rates due to the Bigger-Waters Act of 2012.

The Biggert-Waters Act of 2012 extended the National Flood Insurance Program by several years while also putting in place several reforms meant to make the program more solvent. One of those reforms was a phasing in of actuarial flood insurance rates over time. For many the increased premium will be significant, if not severe. In Florida, the biggest hit will be to homes built prior to 1974 in high risk flood zones. At last week’s hearing it was reported that some of those homes could see rates rise from $500 to $16,000. Current owners of those properties will continue to receive subsidized rates, but those subsidies will discontinue once the property is sold thus hindering the Florida real estate market.