Heartland Institute Comments on Potential Suspension of Flood Insurance in Florida

Published April 12, 2012

The Federal Emergency Management Agency has informed the State of Florida that House Bill 503, which cleared both the state House and Senate by unanimous votes earlier this year, could result in the state becoming disqualified from the National Flood Insurance Program. With 459 participating communities, 2.06 million policies, and $471 billion of coverage in force, Florida is the largest participating state in the program.

At issue is a provision in the bill that would bar counties and municipalities from making the issuance or processing of development permits conditional on obtaining “a permit or approval from any state or federal agency.” To participate in the NFIP, FEMA requires local communities to meet floodplain management standards that include reviewing proposed development to assure necessary permits have been received from all relevant governmental agencies. In a March 30 letter to Gov. Rick Scott, who has yet to sign the legislation, FEMA Regional Administrator Major May warned implementing the provision “may jeopardize the State’s voluntary participation in the NFIP.”

The following statements from insurance experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Tammy Nash at [email protected] and 312/377-4000. After regular business hours, contact Jim Lakely at [email protected] and 312/731-9364.

“This is a clear example of how the lack of a private market for flood insurance has real consequences for the entire state. I wouldn’t blame Gov. Scott for what looks like an almost certain veto. The sudden and unexpected suspension of NFIP coverage would have disastrous consequences for a state like Florida.”

Christian Cámara
Florida Director
The Heartland Institute
[email protected]

“Flood risk is privately insured in many other Western market democracies, including the United Kingdom, Australia, and even Holland, a nation that routinely faces catastrophic flood risks. The United States should follow their lead, beginning by weaning itself off of destructive premium subsidies and encouraging private reinsurance capital to enter the market. Those first steps would be accomplished if the U.S. Senate takes up the flood insurance reform proposal that passed the U.S. House last year by an overwhelming margin.”

R.J. Lehmann
Deputy Director, Center on Finance, Insurance, and Real Estate
The Heartland Institute
[email protected]

The Heartland Institute is a 28-year-old national nonprofit organization with offices in Chicago, Illinois and Washington, DC. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.