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Washington, D.C. – U.S. Senator Marco Rubio (R-FL) today urged Federal Emergency Management Agency (FEMA) officials to make Florida a priority when it comes to correcting flood insurance issues. In particular, Rubio mentioned local initiatives to save money on flood insurance in Pinellas County.  Rubio made his comments during a Senate small business committee hearing on the impact of flood insurance rate increases on small businesses.

“Pinellas County in particular, which is in the Tampa Bay region, has more NFIP policy holders than 43 states. It recently received an award for an initiative,” said Rubio. “What they did is they created an app that uses open data to better map the areas parcels with flood zones in order to save property owners potentially millions of dollars on premiums.

“That’s an example of kind of the innovative solution that localities have the ability to create,” Rubio added. “So how does FEMA plan to empower these sorts of local initiatives, such as the one we saw in Pinellas County?”

The National Flood Insurance Program (NFIP) was last reauthorized for five years in 2012 under the Biggert-Waters Flood Insurance Reform Act of 2012.   In 2014, Rubio supported the Homeowners Flood Insurance Affordability Act of 2014 (HFIAA), which delayed flood insurance premium increases established in the Biggert-Waters legislation. HFIAA was signed into law in 2014 and included an amendment authored by Rubio that did the following: required FEMA to make publically available data to provide the basis for risk premium rates for flood insurance; allow monthly installment payments for premiums; and ensure that mitigation activities completed by an owner or lessee of a real property are accounted for when determining risk premium rates for flood insurance.

Most recently, Rubio cosponsored the Flood Insurance Market Parity and Modernization Act (S. 1679), which would allow for the development of a robust private flood insurance marketplace, giving consumers more options when purchasing flood insurance.

A partial transcript of Rubio’s remarks is below. A video is available here, and a broadcast quality video available for download is available here.

U.S. Senator Marco Rubio
Senate Committee on Small Business and Entrepreneurship
Washington, D.C.
June 30, 2016
https://youtu.be/-6Ok6rrXM3o 

Senator Marco Rubio: “Florida is no stranger to floods. I think last count nearly 40 percent of all the national flood insurance program policies come from Florida. I think it’s the largest state contributor to the program.

“In fact, people in Florida pay four times more into the program than they receive in claim payments. They have numerous businesses, insurers, constituents, local governments, of course are expressing a tremendous amount of concern over not knowing how FEMA determines actuarial premium rates.

“What are FEMA’s plans for updating disclosure and transparency and how it determines the determination of the basis for risk premium rates?

...

“You mention the Office of Insurance Regulation, and you remarked in a letter to them that ‘FEMA is constantly reviewing and refining it’s rate setting methodology,’ so while you continue to refine this methodology, how are we going to guarantee people in Florida, middle-class Floridians and others who bear the brunt of these rate increases, that the rates in fact are not excessive, they’re not inadequate or unfairly discriminatory.

“In essence, what exactly is FEMA going to do to complete its guarantee of fair and equitable rates for the people of the state of Florida?”

“Pinellas County in particular, which is in the Tampa Bay region, has more NFIP policy holders than 43 states. It recently received an award for and initiative. What they did is they created an app that uses open data to better map the areas parcels with flood zones in order to save property owners potentially millions of dollars on premiums.

“That’s an example of kind of the innovative solution that localities have the ability to create. So how does FEMA plan to empower these sorts of local initiatives, such as the one we saw in Pinellas County?”

Senator Rubio then asked questions to Florida residents and COO of Domain Homes, Mr. Robles and Mr. David G. McKey, Broker and Owner, Coldwell Banker One:

Rubio: “If flood insurance premiums were as high as they are today when you first started your business, would your business have been able to start or grow the way it did?”

Mr. Kevin Robles, COO, Domain Homes: “Certainly not. Especially when you have a limited amount of resources, as you well know the homebuilding business is very entrepreneurial in that nature and is very cash intensive. Anything that is a threat such to that is to the affordability of housing certainly is a threat to the very essence of what we do. So no, I would not be able to.”

Rubio: Mr. McKey, one of your recommendations for reforming NFIP was encouraging the expansion of the private market options. So, I’m a co-sponsor of the Flood Insurance Market Parody and Modernization Act, which would allow private flood insurance, as determined by state regulators, to be accepted for meeting the mandatory flood insurance purchase requirements. Could you just describe how would a private market best be able to compliment the NFIP, and to that point, how would an expansion of a private flood insurance market place end up benefiting both consumers and small businesses?”

Mr. David G. McKey, Broker and Owner, Coldwell Banker One: “I think what property owners are looking for is options. There really are none for them right now, so as the NFIP rates continue to go up, they are at a loss for what to do. They certainly don’t want to walk away from their property, yet it makes it tough for them to find a buyer for it.

“I think what the private insurance industry getting into the market will do again is give them some options. Now, if they go into the private insurance market, and the rates on that go up, one thing with the bill is it does give them the option to come back to the NFIP program without losing that grandfathering clause that most of them are being priced at right now, so we think that’s a great thing that would help homeowners go back and forth if they need to.

“But as relators come into my office and they say, ‘We have a property they own cannot afford to pay the NFIP rates and they can’t afford to sell it, what are their options?’ It’s tough for me as a broker that’s been in this business for so long to say, ‘You really don’t have an option at this particular point.’ And I think that’s what our consumers and our property owners are looking for.”

Rubio: “In your testimony you mentioned how many property owners may be overcharged by, your quote here is, ‘Potentially thousands of dollars under NFIP,’ and that’s due to the NFIP’s one-rate table for premiums across the whole country. What kind of opportunities does a private flood insurance market place pretend for ultimately bringing about lower premiums?”

McKey: “I don’t think it’s going to be a quick fix obviously because I think the private insurance industry is going to have to come into the market and they’re going to have to assess their risks in the market for the flood insurance program.

“But I do think, again, if they go in and they look at some areas where they have floods on A that covers whether you’re a costal property or your property away from the coast but you’re basically looking at the same rates, my hope is at some point that they will be able to narrow those rates down where you really pay more in line with what the risk is for your property.”