Following the National Association of Insurance Commissioners’ (NAIC) spring national meeting, the Association of Bermuda Insurers & Reinsurers (ABIR) has encouraged the expansion of the private flood market and state regulation in the US.
Former Missouri director of insurance John Huff, who is now the CEO of ABIR, met with Wisconsin commissioner Ted Nickel and highlighted the devastating impact floods are having on the Midwest, and yet less than 1 percent of consumers have flood insurance coverage.
“As a former regulator and strong advocate for the US system of state-based insurance regulation, I’ve long supported more private sector underwriting when it comes to flood insurance,” said Huff.
Statistics from the Reinsurance Association of America (RAA) show that private flood insurance has been steadily growing in the US, with an estimated $623 million direct premium written in 2018.
Furthermore, federal banking regulator have finalised rules to make it easier for banks to accept private flood coverage for federally backed home loans, which will go into effect on July 1, 2019.
“The state regulators are equipped with the consumer protection tools to build this market in admitted and excess/surplus lines,” Huff continued. “Supplementing the U.S. homeowners insurance market with well-regulated private flood insurance could go a long way to close the protection gap between economic loss and insured losses.”
Another report from actuarial firm Milliman found that, “90 percent of homes [in New Jersey and New York] could see cheaper premiums in the private market.”
Nickel added: “The Midwest continues to suffer from the effects of devastating floods, yet few homeowners have the necessary flood insurance protection. We are now seeing a renewed interest and a real need for the private market to expand flood insurance offerings to give consumers choice and adequate coverage.
“With an estimated 200 million Americans affected by floods just this year, it will be a shock to some consumers to learn their traditional homeowners coverage will likely not cover flood losses. A competitive private sector flood market could be the solution to increasing coverage for families.”
NAIC, ABIR, Flood, North America, Bermuda