Oh to be a fly on the wall
Often we read startling headlines like the one we saw on December 28: “Breaking News: In Reversal, Flood Insurance Program Resumes…,” and we just shrug and move on to the next story. With this one, we at LMA read and re-read it several times and thought through the implications of it.
Two days earlier, we read the headline that the National Flood Insurance Program (NFIP) had turned out the lights and wasn’t selling anymore flood insurance. Since our LMA team is an avid follower and supporter of all things real estate and its direct tie to so many of our readers, we knew instantly the correlation between an NFIP shutdown and real estate sales: Property sales that require flood insurance as a part of the transaction wouldn’t happen.
As it turned out, this wasn’t a plot (as some thought) by proponents of private insurance to gin up the market. Rather it was FEMA lawyers who made a bad call on the anti-deficiency act despite Congress’ action on December 21 to reauthorize the NFIP through May 31, 2019. Only through the intensive efforts of the National Association for Realtors, working with insurance trade groups and the White House national economic council, did the issue get resolved. Oh to be a fly on the wall during those discussions! FEMA has since made it clear it considers the NFIP to have operated continuously since the December 21 reauthorization.
The point was obviously made to the right folks in the DC halls of power, that “you are going to exacerbate the stock market swings if this continues.”
The last time there was this severe of a disruption was in 2012 when Congress passed the Biggert Waters legislation that sent flood insurance rates through the roof. The national real estate lobby went into overdrive to reverse the bill’s “unintended consequences,” forcing the passage of “reform” legislation two years later to soften the premium hike blows.
For this most recent catastrophic flood insurance disruption, i.e. shutdown, Floridians weren’t as exercised as those in other parts of the country. The reason? Florida’s got this! In countless LMA Newsletter editions and podcasts, we have featured Pinellas County Senator Jeff Brandes, who is driving Florida’s PRIVATE flood insurance market. He is personally talking to insurance company CEOs and reinsurers, encouraging them to take advantage of the legislation he championed so Floridians can buy better and cheaper coverage than the NFIP’s.
In fact, many of the 30+ companies offering private flood insurance in Florida posted social media and other communications last week that NFIP is closed but they were selling flood insurance every minute. C’mon America – and other states’ leaders – let’s work together in 2019 and pass simple guidelines with good consumer protections so competitive flood insurance markets can thrive.
And when the next NFIP crisis happens? We can all yawn and real estate can sell with no hitch!