The flood-insurance market is about to experience a major overhaul if Congress decides to move forward with legislation that would significantly change the National Flood Insurance Program (NFIP) guidelines that have been in place for nearly 50 years.
Just how significant is this change going to be? The answer to that is entirely dependent on what version of the legislation Congress ends up actually voting through. There have been several versions of the bill floated before Congress, each created through the work of a bipartisan committee. Regardless of which version of the legislation is voted through, one thing is certain: flood insurance is going to see a surge of private market growth.
The private-insurance market has largely avoided flood insurance for the past 50 years as the lack of reliable flood data made floods an uninsurable disaster for private insurance companies. Essentially, offering flood insurance as a private provider was simply too risky.
The lack of reliable data was a problem specific to the private market–the NFIP has flood data but is forbidden by law from sharing it. The sharing of this data is one of the key components of this new legislation. Giving private insurance companies access to flood data will allow them to make informed decisions about selling flood insurance.
Another major component of this legislation is flood insurance premiums. Under several versions of the proposed bill a cap on the amount premiums can increase each year. This is great news for those who may find themselves in the market for flood insurance in the near future.
The final legislation has to be passed before September 30th, the day the old NFIP regulations expire, or their will be a major disruption of home sales in flood regions. What will that bill actually look like? Time will tell! If you have, or are considering, flood insurance than this is an important story to watch develop.