Former National Association of Insurance Commissioners (NAIC) presidents Ted Nickel and John Huff have said they are encouraged by the recent expansion of the private flood insurance market and regulation in the U.S.
“The Midwest continues to suffer from the effects of devastating floods, yet few homeowners have the necessary flood insurance protection,” said former Wisconsin Commissioner Nickel, who was the 2017 President of the NAIC.
“We are now seeing a renewed interest and a real need for the private market to expand flood insurance offerings to give consumers choice and adequate coverage,” he continued.
“With an estimated 200 million Americans affected by floods just this year, it will be a shock to some consumers to learn their traditional homeowners coverage will likely not cover flood losses. A competitive private sector flood market could be the solution to increasing coverage for families.”
According to the Reinsurance Association of America (RAA), private flood insurance has been steadily growing in the U.S. with an estimated $623 million direct premium written in 2018.
Recently, federal banking regulators also finalised rules to make it easier for banks to accept private flood coverage for federally backed home loans.
“As a former regulator and strong advocate for the U.S. system of state-based insurance regulation, I’ve long supported more private sector underwriting when it comes to flood insurance,” said Huff, former Missouri Director of Insurance and CEO of the Association of Bermuda Insurers & Reinsurers (ABIR).
Additionally, NAIC believes that current economic conditions are conducive to an increase in private flood offerings, while advances in modelling capabilities have generated interest in new product development.
It noted that a recent Milliman report found that “90 percent of homes [in New Jersey and New York] could see cheaper premiums in the private market.”