FEMA Chief Wants Insurers to Play Bigger Role in Flood Coverage
The Federal Emergency Management Agency (FEMA) wants Congress to encourage private insurance companies to provide coverage beyond the current limits for flood insurance. Since theÂ limits for the National Flood Insurance Program haven’t been raised since 1994, FEMA hopes insurers will consider pushing the limit on their own.
FEMAÂ is EncouragingÂ Insurers to Push Limits Upward
FEMA chief, Craig Fugate, told the Senate Banking Committee on Thursday that he thinks the limits on flood insurance coverage should be adjusted upward, which would more accurately reflect the level of risk for floods assumed by the program.
However, he explained that doing so could have too great an impact on flood insurance policyholders who are accustomed to paying a certain amount. For this reason, he said it might be better for the federal government to provide a “basic level” of coverage then turn over the larger coverage amounts to private insurance companies.
This, he thinks, could be a way to prevent the program, run by FEMA, from going further into their current $17 billion deficit.
Increase on Coverage Limits Considered in New Bill
When theÂ Flood Insurance Reform Priorities Act of 2010 was approved last year, one of the adjustments made was that the limit on annual rate increases was allowed to lift.
On May 12, the House Financial Services CommitteeÂ introduced a measure that would allow for an increaseÂ from 10 percent to 20 percent, which means the limits would serve as a reasonable jump from the current limit on coverage of $250,000 on residential structures to reflect the rate of inflation.
The measure is expected to landÂ on the House floor as soon as the next few weeks.