The Federal Emergency Management Agency (FEMA) has responded to Florida’s request to review the National Flood Insurance Program (NFIP) rates but it may not be as forthcoming and helpful as Florida officials had hoped.
In a letter dated Dec. 29, 2015 (see below), FEMA Deputy Associate Administrator for Federal Insurance and Mitigation Roy E. Wright acknowledged Florida Insurance Commissioner Kevin McCarty’s October, 2015 letter in which he asked FEMA to provide ratemaking data as it pertains to Florida to determine if the rates are “excessive, inadequate, or unfairly discriminatory.”
“FEMA is committed to ensuring its rate setting practices are fair, equitable, and transparent, and we appreciate your interest in supporting us in our efforts,” the letter to McCarty states.
Wright’s letter mentions a phone call discussion with FEMA staff and McCarty on Dec. 21, that included two of FEMA’s actuaries.
“We appreciate the collegial tone of that discussion and look forward to continue working with you in this effort,” Wright wrote. “As we mentioned during that phone call, FEMA is constantly reviewing and refining its rate-setting methodology and works to increase the transparency of that methodology.”
The letter outlines how FEMA has tried to increase the transparency of the rate-setting process, specifically since the passage of the Biggert-Waters Flood Insurance Reform Act of 2012. Wright also directed OIR to a June 2015 independent evaluation from the National Academy of Sciences that it says “provides a strong foundation as we continue to evaluate and improve our rate setting.”
Wright concluded FEMA’s response by saying that the agency is in its first steps of its efforts to “increase transparency and ensure our rates are fair and equitable.” Wright said he welcomed further discussions with McCarty on NFIP rate setting after McCarty has viewed the report.
The response from FEMA, however, does not provide the rate information Florida lawmakers are looking for to ease the expense of the Florida flood insurance marketplace.
“The response they sent basically says ‘we will eventually comply maybe someday,'” said Florida State Senator Jeff Brandes, who has been leading the charge, along with McCarty, to offer more affordable flood insurance options in Florida. “I am at a loss for why it is so hard for them to say either yes or no…The data is available.”
OIR said it is continuing discussions with NFIP on the issue. Brandes said he and other state lawmakers will allow some time to go by to see what FEMA’s next response is.
Brandes is confident that these discussions will move forward despite McCarty’s planned exit on May 2.
“OIR has made it very clear that this one of their highest priorities,” he said. “I think the next commissioner will absolutely continue to work for fairness for the Florida flood insurance market.”
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