HURRICANE Irma could test a nascent private flood insurance market in Florida that some advocates say is a model for making US flood coverage more affordable and commonplace in high-risk areas.
Florida’s private flood insurance market represents a tiny sliver of all flood policies in the state, but if a hurricane does hit Florida later this week, policyholders, industry and the federal government will see how private insurance performs in one of the country’s largest flood-prone markets.
“It’s a new breed of insurance in Florida,” said Loretta Worters, a spokeswoman for the Insurance Information Institute, an industry-funded communications group.
“You have these companies that have never been tested for flood.
“We’ll have to see how it works.”
Even before Hurricane Harvey triggered massive flooding in Texas last week, US lawmakers were looking at alternatives to the indebted government-backed model of flood insurance.
The National Flood Insurance Program (NFIP), which owes $US24.6 billion ($F49b) to the US Treasury, is set to expire on September 30.
It is the only source of flood insurance for most Americans because the risk of flooding is so high it makes it too costly for typical insurers to sell.
A Florida law in 2014 simplified the process for setting premium prices, enabling private insurers to sell different types of flood policies in the state, opening up the market.
