Wicker Introduces Flood Insurance Reform to Provide Certainty for Homeowners

May 26, 2011

by Mississippi RealEstateRama

WASHINGTON, D.C. – May 26, 2011 – (RealEstateRama) — U.S. Senator Roger Wicker (R-Miss.) today introduced the Consumer Option for an Alternative System to Allocate Losses (COASTAL) Act to reform the National Flood Insurance Program (NFIP) by using increased data during the claims process. Wicker’s legislation would provide greater certainty to homeowners and the insurance market, ensuring certain losses from future storms are settled in a timely and equitable manner.

“The current flooding in Mississippi is a reminder that flood insurance is necessary, but changes must be made to the NFIP to reach a long-term extension,” said Wicker. “People on the Gulf Coast know hurricane season comes each year, and we know all too well that many aspects of the insurance industry failed us after Katrina. The COASTAL Act would use scientific data to settle total loss properties after a hurricane. Many residents are not aware of the data or how it could be helpful to them. This legislation is part of the solution to the wind versus water dispute problem, and answering it will help the effort to enact a multi-year NFIP reauthorization.”

Currently, the National Flood Insurance Program expires on September 30, 2011. The COASTAL Act, S.1091, utilizes data currently collected by the National Oceanic and Atmospheric Administration (NOAA), academic institutions, and private entities to allocate wind versus water damage following significant storms. Using a post-storm event formula developed under the Wicker bill, damage would be determined by its source and attributed to wind or water peril. The formula would be applied on a property-by-property basis so individual engineering characteristics of each home would be taken into account. This would allow accurate insurance settlements when no tangible evidence remains after a hurricane.

The alternative loss allocation system would be based on the timing, location, and magnitude of wind speeds and storm surges before, during, and after a major coastal storm. An independent arbitration panel would examine administrative appeals that may be submitted by policyholders or insurers on a limited basis.

Last year, Wicker held a roundtable with Mississippi Gulf Coast residents to discuss ways to improve the NFIP. “There is no question that one of the most difficult obstacles in recovering from Hurricane Katrina – or preparing for the next storm – has been the cost and availability of insurance,” remarked Wicker during that meeting.