Iowa’s top insurance regulator is backing the University of Iowa in a dispute with the federal government over how much insurance the campus must carry after rebuilding from the 2008 flood.
Insurance Commissioner Nick Gerhart has asked the Federal Emergency Management Agency to waive a requirement that the university obtain flood insurance for specific buildings rather than the campus as a whole. He said the university’s $250 million blanket policy with insurance carrier FM Global and a separate $22 million policy through a federal program should be enough to protect against any future flood damage.
FEMA has not decided whether to grant the waiver requested by Gerhart in a Sept. 28 letter to President Barack Obama and is still reviewing the request, spokesman Michael Cappannari said.
The issue is important because the university must satisfy FEMA insurance requirements in order to obtain millions of dollars the agency has promised to rebuild from the 2008 flood, when water from the Iowa River damaged and destroyed numerous university buildings.
If FEMA does not grant the waiver, the university could be forced to buy specific insurance policies covering each campus building, even those outside the flood plain. In a report to the Iowa Board of Regents last week, university officials said that approach was “not reasonable and not cost-effective.”
A major performing arts theatre, the music school and an art building are among the flood-damaged structures being replaced with the help of federal disaster assistance. So far, FEMA has delivered about $125 million to help the university’s rebuilding out of roughly $270 million that has been promised, the university report shows. Most of the projects are expected to be completed by 2016.
Cappannari noted that federal rules typically require agencies receiving disaster assistance funds to maintain flood insurance in the amount of the money they received to rebuild each flood-damaged building.
University officials say they learned earlier this year that FEMA might not accept its blanket policy and might require higher insurance limits to satisfy the requirement. But the requirement can be waived in certain circumstances with the support of the state insurance commissioner.
In his letter, Gerhart said he agreed with the university that having one campuswide insurance policy is the most reasonable way for the university to manage its risk. He pointed to the number, location and variety of buildings the university owns as well changes that have been made to protect them from future damage.
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