Senate Bill Would Drive Up Flood-Insurance Premiums

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Senate Bill Would Drive Up Flood-Insurance Premiums

Senate Bill Would Drive Up Flood-Insurance Premiums

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WSJ-

Vacation homes and commercial properties in flood-prone areas could see their flood-insurance premiums more than double over a four-year period under a bill poised to clear the Senate this week.

The measure, which was endorsed by the Obama administration Monday, is meant to shore up the finances of a federal program that provides mandatory flood insurance. The Congressional Budget Office estimates the bill would save $4.7 billion by 2021.

The government-run National Flood Insurance Program has borrowed nearly $18 billion from the Treasury Department to pay claims resulting from the hurricane season in 2005—a particularly big year of flood losses. The Senate is expected to take up the legislation Tuesday or Wednesday.

The government pays flood-insurance claims, while private insurers sell policies and manage claims under the program, created in 1968. Flood insurance is required for federally regulated lenders and government-backed mortgages in flood-prone areas. Insurance industry groups say the program’s rates are far too low, making it hard for private competition to emerge.

[WALL STREET JOURNAL]

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