Florida Insurance Commissioner Kevin M. McCarty has followed through on his promise to State Senator Jeff Brandes to investigate the National Flood Insurance Program’s (NFIP) rating practices of Florida insureds.
In an Oct. 2 letter to Craig Fugate, administrator of the Federal Emergency Management Agency (FEMA), McCarty requests FEMA “work collaboratively with the Florida Office of Insurance Regulation by providing access to ratemaking data and supplemental information.” McCarty says access to such data will facilitate the review of how NFIP determines its rates.
The letter to FEMA includes a supplemental document entitled the “NFIP Rate Support Data Request”, which outlines the basic rate-making data the Office is requesting by December 15, 2015.
“As the nation’s leading provider of flood insurance in the United States, we believe that the NFIP’s data set is the most complete and robust data set available. We would therefore very much appreciate if the NFIP would provide the Office with the information requested in the attached document,” McCarty wrote.
The information requested will also enable the Office to address the concerns raised by Senator Brandes on behalf of his constituents in a letter sent to the Commissioner on August 12, a statement from FLOIR said.
In his letter to McCarty, Brandes expressed concern over rising flood insurance rates in the state of Florida, saying “Florida is facing a growing flood insurance crisis” and that Floridians “cannot wait on Washington to institute the federal reforms necessary to unleash the competitive forces of the private market.”
Brandes said although there are jurisdictional limitations on FLOIR in regulating NFIP rates, “the input of our state regulator on this matter is critically important to the success of federal reform initiatives.”
McCarty responded in a letter on Aug. 14 that NFIP’s rates for Florida may be “unfairly discriminatory” and that his office would ask for the actuarial study, including data and models used to determine rates in the state, from FEMA for further examination.
“We share your concern about the need for transparency in the ratemaking process utilized by the Federal Emergency Management Agency for the National Flood Insurance Program (NFIP), and we have publicly expressed those concerns,” McCarty said in his Aug. 14 letter to Brandes. McCarty said Florida’s NFIP experience suggests that the flood loss ratio from 1978-2012 was 28.3 percent — which is not an alarming loss ratio and does not seem to suggest that dramatic increases are needed for Florida risks.
“The Office can request pertinent data and perform a review of NFIP rates based on Florida law if we can acquire the necessary data from NFIP,” McCarty said at the time.
Fellow Florida lawmaker, Representative Bill Hager, also spoke out on NFIP’s rates for Floridians and said the information McCarty obtains could help state lawmakers to develop legislation that encourages more private insurers to offer flood insurance in the state.
“Our goal is pretty simple in all of this. We want a robust market. We want to unleash competition. We want relief for homeowners,” said Hager.
A copy of McCarty’s letter to FEMA is below.
- Florida Commissioner McCarty Says NFIP Rates May Be Unfairly Discriminatory
- Q&A: Florida Representative Backs Call for NFIP Transparency
- Private Market Could Grow As Government Flood Insurance Prices Rise: Fitch
- Florida Private Flood Bill Now Law But Market May Take a While to Develop
- Is Private Market an Option for Florida Flood Insurance?
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