Regulators: What Private Flood Needs to Succeed
At the National Association of Insurance Commissioners’ Spring Meeting, Louisiana Insurance Commissioner Jim Donelon said the anticipated reauthorization of the National Flood Insurance Program (NFIP) needs to allow for a “bounceback” provision, also known as continuous coverage, for a private flood insurance market to flourish.
Donelon said various drafts of the reauthorized NFIP, which has been extended to May 31, include continuous coverage, which would allow policyholders to switch back and forth between federal and private programs as long as they had no lapse in coverage. Without that provision, he said consumers would not enter the private market if they understand their insurer could leave the marketplace and leave them without options.
“Without that, we really will be very limited in the take-up of private flood, because continuous coverage is necessary for the protection of those grandfathered with lower rates in higher-risk areas,” Donelon said. He added that producers would be at risk for errors and omissions exposure in the event that one of their customers loses insurance and is left without options.