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The National Association of Mutual Insurance Companies (NAMIC) is just one of many insurance groups concerned about what’s going on with the National Flood Insurance Program (NFIP).
As usual, it starts with reauthorization and then works its way toward pricing and risk.
NAMIC senior vice president, Jimi Grande explained the problem to the House House Financial Services Subcommittee. Congress has been extending the NFIP authorization a few months at a time for several years. He said since the end of 2017 the NFIP has been reauthorized 19 times.
Some of those extensions have been at the last minute and for just a few weeks!
In the meantime, the private flood market has customized coverage and simplified the claims process for both high and low-risk clients. The NFIP hasn’t come close to doing anything like that. “Lawmakers must recommit themselves to passing long-term legislation needed to reform the NFIP into a financially stable program that can help millions of Americans who are facing growing flood risks,” Grande said.
He — and NAMIC — want a reduction in subsidies and how coverages are priced and base them on actual risk. Grande did note that the NFIP reforming Risk Rating 2.0 has done some.
Just not enough.
“The NFIP cannot survive on its own if the rates for flood insurance aren’t in line with expected losses,” Grande said. “Matching rates to risk is the only way to make the NFIP viable, but we can ease that transition for policyholders by moving rates gradually. We must make sure every homeowner understands what their actual flood risk is otherwise we are creating a false sense of security that inevitably leads to greater losses.”
Grande said it’s important for a program that bleeds money to get it aligned with private markets. Yet, once again, the NFIP is temporarily authorized and it expires at the end of September of this year.
“Congress has been kicking the can down the road when it comes to the NFIP for way too long,” Grande said. “Ultimately, they can choose to adopt common-sense reforms and have a stable and secure NFIP as part of a vibrant and competitive flood insurance marketplace.”
Source link: Insurance Business America — https://bit.ly/3z5VwQv |
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