Florida Insurance Consumer Advocate Among Notables Submitting Comments on Federal Insurance Office National Catastrophe Study

Sep 4, 2013


At least 47 prominent insurance industry entities and consumer advocate organizations have submitted comments on a pending Federal Insurance Office (“FIO”) study of the U.S. natural catastrophe insurance market pursuant to Section 100247 of the Biggert-Waters Flood Insurance Reform Act of 2012.  Once the study is concluded, the results will be presented in a report to Congress.

The statutory study also requires the FIO to evaluate insurance availability, market approaches and ability to mitigate property damage risk, markets’ financial condition in high-risk regions, and the role of federal and state governments in incentivizing risk mitigation markets.  

To access all 47 comments submitted as of today, September 4, 2013, as well as the original request for comment notice, click here.

Among those submitting comments was Florida Insurance Consumer Advocate Robin Smith Westcott, who made several mitigation-related recommendations in her five-page letter to FIO Director Michael McRaith. 

In her letter, she related that 75 percent of the homes in Florida’s Citizens Property Insurance Corporation’s Coastal Account do not have hurricane impact opening protection.  In 2012, less than six percent of Federal Emergency Management Agency funding had been used for residential retrofit mitigation, she added.

Florida, she explained, has attempted to standardize the process of mitigation-related insurance policy discounts.  Above all else, the result of this initiative has provided the first data sets on mitigation features for residential property throughout the state and could serve as a good starting point for data collection sufficient to create models and standards for substantiating the effect of mitigation on wind loss.

Because Florida already has much of the infrastructure needed to support data collection and modeling capabilities required under the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012, Ms. Westcott noted, this information could be used to expedite and formulate a comprehensive solution for identifying and addressing wind versus water loss exposure. 

She also suggested that Florida’s State Housing Initiatives Partnership (SHIP) grants and Community Development Block Grants could be expanded to enable pre-catastrophe funding for property mitigation, matching grant programs or other direct funding to support mitigation efforts.  This could include cost-sharing programs between federal and state entities, which would likely reduce exposure for Floridians to future assessments, as well as reduce the federal government’s exposure for storm relief and cleanup costs, Ms. Westcott explained.  If significant savings could be quantified for this relatively simple mitigation effort, the savings might be exponential for more aggressive and comprehensive mitigation initiatives.

In addressing ongoing resistance to creating a national catastrophe fund that often singles out potential Florida hurricane losses that would be subsidized by the rest of the nation, Ms. Westcott reminded that Florida holds the highest participation rate in the National Flood Insurance Program.  Therefore, it could be argued that Florida heavily subsidizes flood risk for the rest of the country, conversely. 

In defining the term “natural catastrophe” and ensuring its applicability to any federal program in addressing the insurability of these risks, Ms. Westcott said that any definition and its application should be comprehensive and consider all perils that exist throughout the United States.  “This will go a long way to promote equity in the federal government’s involvement with those risks,” she wrote.

Others that responded to the FIO’s request for comments included the Association of Bermuda Insurers and Reinsurers, State Farm Mutual Insurance Companies, Guy Carpenter, the National Association of Professional Surplus Lines Offices and the Consumer Federation of America.

To access the comments on www.Regulations.gov, click here.

To read the specifics of the FIO’s request for comments, click here.


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