Florida has put out the welcome mat for private insurance companies that are willing to cover property in the state against flooding, but early on has only received a trickle of interest, the Tampa Tribune reported last week. Given the history of flood protection in Florida, this isn’t surprising. The state passed a law facilitating the entry of private insurers into the Florida flood coverage market to give property owners an alternative to the National Flood Insurance Program. Congress passed a law letting the deficit-plagued program charge rates more in line with the financial risk the property it insures presents. The expectation was the higher rates would prompt property owners to seek private flood insurance alternatives, improving the federal program’s financial outlook by reducing the amount it will have to pay out after the next major storm makes landfall. Then people in the federal program found out exactly how sharply higher their flood insurance rates were going to be and instead of looking for private sector alternatives began screaming. In response, members of Congress — as always, acutely attuned to the plight of their constituents and their own political survival — quickly voted to delay the rate increases. The private insurers say they have computer programs that will let them more accurately gauge the flood threat of individual parcels of property, potentially allowing them to offer some customers more attractive rates. Given the federal government’s sorry record with technology, it won’t be able to match this anytime soon.
Still, Congress will have to let reality reign in the flood insurance program before most property owners will be motivated to seek private coverage.