Florida Passes Private Flood Insurance Legislation

In Florida’s most recent legislative session, the Florida Senate passed Senate Bill 542 (CS/CS/CS/SB 542) amending several existing insurance statutes and creating Section 627.715, Florida Statutes, to provide for the sale of personal lines residential flood insurance in Florida. Pursuant to this legislation, authorized insurers will have the opportunity to sell standard flood coverage, which is similar to that currently offered by the National Flood Insurance Program (NFIP), as well as preferred flood coverage, which is broader in scope, in addition to customized and supplemental flood coverage.

The legislation provides information pertaining to rate-setting and requires an insurer providing flood insurance in Florida to notify the Office of Insurance Regulation (OIR) at least 30 days before writing the flood insurance and to file a plan of operation and financial projections or revisions to such plan. While the bill creates an exemption from OIR rate reviews, OIR may examine rate filings at its discretion.

The legislation precludes Citizens Property Insurance Corporation from writing flood insurance. It also precludes the Florida Hurricane Catastrophe Fund from providing reimbursement for flood-related losses.

This legislation follows the 2012 passage of the U.S. Biggert-Waters Flood Insurance Reform Act, which provided for the continuation of the NFIP. To make the NFIP actuarially sound, the Act brought about a rate increase for about 20 percent of NFIP policyholders nationwide, an increase somewhat mitigated by subsequent legislation. According to the OIR, over two million NFIP policies are written on Florida properties. Senate Bill 542 provides Florida property owners with a private alternative to the NFIP.

The Senate voted 30 to 3 on May 1, 2014, in favor of Senate Bill 542. Following its passage in the Senate, the bill was sent to Governor Rick Scott’s office to be signed into law.