19 Jul Alternatives Emerge Amidst Possible NFIP Shutdown
A recent study from the National Flood Insurance Program reported that “private flood insurance would reduce premiums for 69 percent of single-family homes in Louisiana, with 42 percent of homeowners paying less than one-fifth the price of policies.” As the National Flood Insurance Program is prepared to end on September 30th, political leaders question how to offer coverage while still reducing costs.
Although there have been debates regarding the benefits and drawbacks of the NFIP, no one can deny the significance of flood insurance coverage in a state like Louisiana. Louisiana, along with Florida and Texas, accounts for approximately 56 percent of all NFIP policies, so flooding is sure to remain an issue within the state with or without a government program. Moreover, even those without flood insurance in some areas of Louisiana can be at risk of suffering from flood damage. With the possibility of losing the national program, some coalitions have designed a new bill to provide an alternative flood plan through private insurance.
In June, the House Financial Services Committee passed The Flood Insurance Market Parity and Modernization Act to promote private insurance alternative to 410,000 Louisiana homeowners. According to studies brought by the coalition SmarterSafer.org, up to 85 percent of homes in a high-risk flood zone would see lower premiums through private insurance, and some zones would see up to 95 percent of Louisiana homes with lower premiums. Even the highest risk areas would see a minimum of 57 percent of households paying lower premiums under private insurance coverage. While this study comes from predictions rather than precise results, the numbers show a promising forecast for a new market plan.
Regardless of the exact numbers, these studies also show that a focus on the private insurance market could lead to more flood coverage options that would likely become less expensive over time. Also, the wider availability can provide an opportunity for people to become more aware of the need for flood insurance as the state goes through another hurricane season. With the National Flood Insurance Program set to end in September, it’s as good as time as any to understand what that means.