Since the Insurance Department announced its one-stop shop flood insurance webpage February 2, 2016, the number of private market residential flood policies has increased from 1,518 to 3,392. The bulk of these policies, 2,526, are sold through what is called surplus lines insurance. This is insurance sold through companies licensed in other states or countries but not in Pennsylvania, but through producers who are licensed in Pennsylvania. The remaining 866 policies are through Pennsylvania licensed companies. In one year, 41 producers selling surplus lines residential flood policies, and 17 Pennsylvania licensed insurers selling private market coverage, have registered on the Insurance Department website.
Prior to 2013 and changes in federal law, almost all residential flood insurance was sold through the federal government-run National Flood Insurance Program (NFIP). This program subsidized high risk properties and this kept most private insurers from selling their own products. However, the NFIP has fallen nearly $24 billion in debt, and Congress has ordered the subsidies withdrawn over a period of years, causing many homeowners' premiums to rise substantially. At the same time, the federal government has re-mapped many properties into what are called Special Flood Hazard Areas (SFHAs). Homes in SFHAs with mortgages backed by the federal government are required to have flood insurance, so many homeowners who did not need it before are now required to have this insurance.
"Because Governor Wolf established consumer protection as the top priority for the Insurance Department, and many homeowners were facing steep increases or being required to purchase flood coverage for the first time, my department researched ways to help homeowners," Commissioner Miller said. "We found in many cases, especially where properties which never or rarely experience flooding have been re-mapped into SFHAs, homeowners can get comparable private coverage at much lower cost than the NFIP insurance."
Over the past year, consumers have reported saving hundreds of dollars annually on private flood insurance as opposed to what comparable NFIP plans would have cost. This includes Delaware County resident Danielle Cyr. "I am more than happy with the service and the savings I have benefited from switching to private market flood insurance from FEMA. I save about $1000 per year," Ms. Cyr said.
One remaining issue for private flood insurance is the reluctance of some lenders to accept this as insurance meeting the requirements for federally backed mortgages. Federal regulators are now considering regulations to establish guidelines for acceptable private coverage. Commissioner Miller has written a letter urging the regulations to specifically say surplus lines policies which meet federal requirements would be acceptable, as surplus lines continue to sell most residential flood coverage in Pennsylvania.
While only homes in SFHAs are normally required to have flood insurance, Commissioner Miller recommends homeowners outside of these areas consider buying this protection as well. She noted flooding in Pennsylvania often occurs outside of designated SFHAs, and many homeowners outside of these areas do not have flood coverage, which is not usually part of a standard homeowner's policy.
"Severe flooding in north central Pennsylvania, particularly Centre County, last fall occurred outside of designated SFHAs, and most impacted homeowners did not have coverage. For homes outside of these areas which rarely experience flooding, coverage may be available at very affordable prices," Commissioner Miller said.
The Insurance Department's one-stop flood insurance webpage is at www.insurance.pa.gov, then click on "Flood" under Insurance Coverage Resources.
MEDIA CONTACT: Ron Ruman- 717-787-3289
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/pa-insurance-commissioner-marks-one-year-anniversary-of-one-stop-shop-flood-insurance-webpage-notes-number-of-private-policies-has-more-than-doubled-300401326.html
SOURCE Pennsylvania Department of Insurance