National Flood Insurance Program Rates are Unfairly Discriminatory, Florida Insurance Commissioner Responds to Senator Brandes

Aug 17, 2015

Insurance Regulation Lawyer

Above:  Colodny Fass’ Donovan Brown Notes Florida Insurance Commissioner Kevin McCarty’s Response to Senator Jeff Brandes on National Flood Insurance Program Rates


Rates paid by National Flood Insurance Program policyholders in Florida are unfairly discriminatory, Florida Insurance Commissioner Kevin McCarty said in his August 14, 2015 response to State Senator Jeff Brandes, who is seeking the release of detailed NFIP claims and exposure data to assist private flood insurers and modelers in developing their own policy pricing.

Qualifying his assessment, Commissioner McCarty explained that the NFIP has developed its rating based on multiple zones that are combined to determine rates, with 30 different A zones and separately 30 different V zones.  Those zones are defined based on a theoretical determination of the probability of flooding (the V zones are more coastal) and averaged together to charge one rate across the country.  The averaging together of zones with different costs and charging one rate would be considered unfairly discriminatory from an actuarial perspective, which would not pass scrutiny under Florida law, he said.

To best address these rating issues, Commissioner McCarty urged primary focus on the future flood projections now being developed by the Florida Commission on Hurricane Loss Projection Methodology (“FCHLPM”), which includes an actuary from the Florida Office of Insurance Regulation.  

Through its Flood Standards Development Committee, the FCHLPM is now engaged in developing “actuarial methods, principles, standards, models, or output ranges for personal lines residential flood loss,” Commissioner McCarty said.  The FCHLPM expects to adopt this plan by July 2017.

Meanwhile, the Florida Office of Insurance Regulation will request the NFIP actuarial studies, including all data and models used.  If received, regulators will review NFIP rates based on Florida law, similar to an examination of a private company filing.

Commissioner McCarty’s letter to Senator Brandes is attached for review. 


Should you have any questions or comments, please contact G. Donovan Brown at Colodny Fass (+1 850 545 8864 or



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