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Florida Senate passes private-market flood insurance bill

This morning, March 26, 2014, the Florida Senate passed Senate Bill 542 which could enable private insurers to begin offering Floridians flood insurance. Many parts of the country are feeling the effects as the nationally subsidized flood insurance program (NFIP) scales back. The discussion has been heated in Florida as well as constituents turn to their state senators and state representatives for a way they can stay in their risky flood prone homes.

Libertarian John Stossel wrote a commentary for ABC News stating, "The subsidized insurance goes to affluent homeowners on both coasts — from Malibu Beach, where movie stars live, to Kennebunkport where the Bush family has a vacation home, to Hyannisport, where the Kennedy family has a summer home, to the Hamptons, where I bought my house. The insurance premiums were a bargain. The most I ever paid was a few hundred dollars. Federal actuaries say if the insurance were realistically priced, it would cost thousands of dollars. Why should the government guarantee water's-edge insurance? Why should the government be in this business at all?"

Today, Republican Florida Senate President Don Gaetz said:

“Senator Brandes’ innovative legislation paves the way for a private market for flood insurance in Florida, freeing homeowners from the dictates, irregularity and uncertainty of Washington bureaucrats. Under this legislation, Floridians will have a wide range of flexible options to choose from so they can reach an affordable level of coverage for their property.

“The bill emphasizes consumer choice and will let us control our own destiny in this critical market. This legislation makes Florida a national leader in the flood insurance marketplace and I am grateful to my colleagues for their overwhelming support.”

For years the NFIP has enabled Americans to build on real estate that is in flood zones offering taxpayer funded low-cost insurance to lessen their risk. This manipulation of the real estate market has put the NFIP billions of dollars in debt and Florida law makers were trying to find a balance, bringing in private insurers to pick up the slack. It is unknown how different the premiums will be, however they are expected to be considerably higher than those offered by the NFIP. As provided under SB 542, the insurance will offer options to flood area property owners as to the extent of insurance they are seeking. For instance, they could choose to have the remainder of the mortgage paid off, replace the cost of land improvements or get paid the cash value of their property. The insured will also have further options such as excluding various coverage or including things like reimbursement for living expenses, content coverage, replacement costs for secondary structures and more.

The NFIP currently writes more flood insurance policies in Florida (more than 2 million) than any other state. Although Florida policies make up about 37 percent of the total policies written, since its inception the program has paid only about $3.7 billion for flood losses in Florida compared to more than $50 billion nationwide.

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