The National Association of Mutual
Insurance Companies (NAMIC) recently urged Congress to reform the National Flood
Insurance Program (NFIP) as it works to reauthorize it in a letter to the
Senate Banking Committee and House Financial Services Committee.
“Since private-sector insurance companies
must charge risk-based rates to remain viable, they cannot compete with the
subsidized rates of the NFIP,” said NAMIC
Senior Vice President of Government Affairs Jimi Grande. “For any effort to
increase private-sector participation in the flood insurance marketplace to be
successful, it must address the fact that, unless the subsidy issue is
addressed, companies will be asked to sell a similar product at, in many cases,
a much higher price.”
The letter took aim at NFIP subsidies that
NAMIC suggests are preventing the program from meeting potential obligations.
In the letter, Grande argues that the subsidies create inadequate rates that do
not reflect the risks of living in high-risk flood zones and that make
policyholders less cognizant of those risks.
“If nothing else, people need to understand
the truth about what they’re facing when it comes to flood risk,” Grande said. “Even if they
continue to receive a subsidy, NAMIC believes that helping homeowners
understand the risks they face is the best incentive for them to act to reduce
that risk.”
