State unveils one-stop shop for flood coverage information

The state recently created a new webpage, providing information on flood insurance available to Pennsylvania homeowners and renters, according to Insurance Commissioner Teresa Miller.

Many homeowners may be facing steeply rising premiums under the federal government’s flood insurance program are unaware they can get private market flood coverage, in many cases at substantial savings as compared to the federal government coverage. The website is designed to give flood insurance options.

“Gov. Wolf and I became aware of the problem of rising premiums and homeowners being re-mapped into flood zones, and he asked me to explore ways we could help homeowners,” Miller said. “We found that, due to the rise in premiums under the federal government’s National Flood Insurance Program (NFIP) in the past three years, private insurers began becoming interested in this market. Further research found that in many cases, comparable private market coverage was available for substantially lower premiums than the NFIP product.”

“However, we found very few private insurers are in the residential flood insurance market yet, and they can be hard to find,” she added. “That’s why we created the one-stop shop webpage so consumers could get useful information about where to find private flood coverage.”

“For most Pennsylvanians trying to buy individual flood insurance coverage, especially for their homes, the National Flood Insurance Program (NFIP) run by the federal government was thought to be the only option,” Miller said. “But with Congress mandating federal subsidies end for NFIP coverage, and premiums be based on the property’s actual risk, premiums for this coverage are rising and may become difficult for many homeowners to afford.”

“With premiums for the federal government’s flood insurance program rising, and re-drawn Federal Emergency Management Agency (FEMA) maps placing many properties in flood zones that had not been there before, Gov. Wolf and I are committed to finding ways to help consumers identify lower cost coverage,” Miller said.

Miller said the NFIP fell billions of dollars in debt from overwhelming claims following hurricanes Katrina and Sandy, leading Congress to take action. The good news for Pennsylvania consumers is the rapidly rising NFIP premiums are making flood insurance more attractive for private market insurers, with private coverage available in many cases at drastically lower rates than the federal government insurance.

Most private market residential flood insurance in Pennsylvania is sold by what are called “surplus lines” insurers. These are insurers licensed in other states or countries, but not licensed in Pennsylvania, who typically offer insurance coverage that is considered higher risk, and that many licensed companies do not offer. Thus, private market flood insurance is difficult for most consumers to find.

The webpage has flood insurance links for surplus lines insurers selling coverage in Pennsylvania, as well as Pennsylvania licensed insurers selling flood insurance. Licensed insurers typically provide coverage for only a very limited market at this time. The page has a link to the NFIP, which may remain the only option for high risk properties.

“I hope Realtors® will use this site as a resource to help clients having trouble affording a home because of flood insurance, or encountering difficulty selling a home for this reason,” Miller added. “Some mortgage lenders, because they are unfamiliar with private flood insurance, may be reluctant to accept some private policies. If Realtors® encounter any problems with lenders accepting private flood policies, they can contact the Insurance Department. We will review the policy and advise whether we believe it is comparable to NFIP coverage.”

Miller added that it’s important for Realtors® to know not all homes will get private insurance.  Private policies are not likely to be available for high risk properties, but many homes now under NFIP will have the option of private coverage.

“My goal is to make sure Pennsylvanians can find good coverage at affordable prices, and this one-stop website will help homeowners and renters be able to do this,” Miller said.

Michael Megoulas, a homeowner in Hershey, has lived in his home since 1999, and never experienced flooding, getting only a relatively minor amount of water in his basement when much of Pennsylvania, including the Hershey area, suffered severe flooding in 2011 from tropical storms Ivan and Lee.

“In 2012, my property was re-mapped into a flood zone, and I was told I had to buy flood insurance to keep my mortgage,” said Megoulas. “NFIP insurance would have cost me $2,700 a year, but I was able to find private coverage for only $718 annually.”

Miller last month testified before a Congressional subcommittee in support of proposed federal legislation that would help facilitate the entry of additional carriers into the private flood insurance market and provide consumers with access to additional options for flood insurance.