A bill to encourage private market options for flood insurance in West Virginia appears to be on the fast track through the state Senate, but the impact it will have for thousands of local property owners facing huge bills remains unclear.
The private market for flood insurance is virtually nonexistent, forcing most property owners in flood zones into the FEMA-run National Flood Insurance Program to obtain coverage required by mortgage lenders. The idea behind the bill, according to its lead sponsor, Sen. Rocky Fitzsimmons, is to encourage competition that could lead to more affordable rates for Mountain State residents experiencing massive premium increases as a result of the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012.
Wheeling insurance agent Chad Broadwater believes the bill is "a good start," but he's unsure whether its passage will create enthusiasm among private insurance carriers to begin writing flood policies.
"I don't know who's going to step up and start a private flood insurance program. ... I think they would have done it by now if they thought it would be profitable," Broadwater said.
The Fitzsimmons bill - introduced Monday and co-sponsored by Senate President Jeff Kessler, D-Marshall, and Sens. Larry Edgell, D-Wetzel, Jack Yost, D-Brooke, and Donald Cookman, D-Hampshire - is moving through the Senate with lightning speed. It took just one day to pass through the Banking and Insurance Committee and could receive a vote on the Senate floor as early as Friday.
"West Virginia residents understand that our flood risk is very different from those in coastal areas. ... The insurance market should be allowed to meet this most important need," Fitzsimmons, D-Ohio, said.
The Fitzsimmons bill would increase flexibility in rates and types of coverage, and would allow agents to export contracts to provide flood insurance to certain carriers not licensed in the state - known as "surplus lines" insurers - without meeting certain requirements. It also specifies that homeowners may opt to insure only the outstanding amount of their loan.
But Broadwater said some lenders impose insurance burdens on borrowers that exceed those required by law.
"Some banks will tell their customers they need to have up to the full replacement cost. ... The bank should only be concerned about protecting their interest," he said.
Although Broadwater said the state-level bill could provide limited help, he believes the responsibility to remedy Biggert-Waters' unintended consequences lies with Congress - which can't seem to agree on the best way to do that.
The Democrat-led Senate favors an outright delay of increases for four years, but many in the GOP-controlled House believes that course fails to address the underlying problem - a program that is nearly $25 billion in debt. House Majority Leader Eric Cantor has said a vote on more modest relief for homeowners could happen next week, but lawmakers have yet to reveal specifics of such a plan. Reports indicate the House bill would continue gradual premium increases but end the sudden jump to "full risk" rates for new policies that is making it difficult to buy or sell property in a flood zone.
Broadwater believes the best way to ensure fairness in the flood insurance program is to create more realistic flood maps that accurately represent risk.
"You can't rate someone in Wheeling the same way you rate someone who's 15 feet below sea level in New Orleans," Broadwater said, adding that homeowners on Wheeling Island, for example, usually have ample time to prepare when the Ohio River begins to rise. "They're usually very prepared. Their house isn't being knocked off its foundation and floating down the river to Parkersburg."