PCI urges the Senate to pass flood legislation that does not include wind cover

The Property Casualty Insurers Association of America (PCI) opposes the inclusion of language from the Multiple Peril Insurance Act within a larger flood reform bill. This has been passed by the House of Representatives Thursday.

PCI believes that, while the inclusion of wind coverage within the National Flood Insurance Program (NFIP) is well-intentioned, it may produce unintended negative consequences for millions of consumers.

“Adding wind coverage will create artificial subsidies, which essentially means rate hikes for consumers in non-coastal parts of the country who do not face the same wind-damage risks as coastal policyholders,” said Ben McKay, PCI’s senior vice president, federal government affairs.

“Adding wind coverage to the NFIP simply creates a federal government fund that will compete with existing state funds and potentially with the private market

Ben McKay

“It is unnecessary for Congress to expand the flood programme, considering that wind coverage is already available either through the private sector or state wind insurance programmes. There is no need to have a government programme competing with coverage that already exists.”

According to PCI, the current system provides consumers the opportunity to purchase coverage at a price that reflects the risk based on the location of the property and the likelihood of a loss.

“Residual state-based mechanisms provide coverage for wind damage where no market exists, and private insurers provide wind coverage where there is a market,” McKay said. “Adding wind coverage to the NFIP simply creates a federal government fund that will compete with existing state funds and potentially with the private market.”