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Insurance Commissioner Urges Congressional Support for Bill Encouraging Mortgage Lenders to Accept Private Flood Insurance


July 27, 2015

Harrisburg, PA - Insurance Commissioner Teresa Miller is calling on Pennsylvania’s congressional delegation to support legislation defining the mandatory purchase requirements in private flood insurance for these private policies to be recognized by mortgage lenders. Under current law, only policies purchased through the National Flood Insurance Program (NFIP) are automatically considered sufficient to fulfill mandatory purchase requirements.

Commissioner Miller issued the following letter to the 19 members of Pennsylvania’s congressional delegation:

Dear Honorable Members of the Pennsylvania Congressional Delegation,


I am writing to request your support and co-sponsorship of important legislation aimed at helping to reduce extremely high flood insurance premiums experienced by individuals across the nation by further aiding the entrance of private insurers into this market.

The Biggert-Waters Flood Insurance Reform Act of 2012 affirmed Congress’ intent that lenders accept private flood insurance as an alternative to the National Flood Insurance Program (NFIP) where these privately-written policies meet the statutory definition. What we have found however is the definition of private flood insurance and prescriptive conditions regarding this insurance have created significant obstacles impeding the development of a private market. The clarifications included in H.R 2901 and S. 1679 would assist in removing any unintended barriers to help prompt more insurers to enter this market.

As you are likely aware, flood insurance has been primarily available through the NFIP, where premiums have been subsidized, resulting in a $24 billion program deficit. In an attempt to shore up the program, the Biggert-Waters Flood Insurance Reform Act of 2012 required policies to be priced based on risk, which resulted in significant rate increases for some policyholders.

In Pennsylvania, we have an estimated 86,000 miles of creeks, streams and rivers, resulting in more than 34,400 flood insurance policyholders across the Commonwealth. From 2006 through 2014, Pennsylvania residents filed nearly 18,000 flood insurance claims, receiving more than $551 million in payments. Our Insurance Department has been working hard to better streamline the process for property owners to purchase flood insurance outside of the NFIP, in many cases making prices more affordable for property owners. For example, in one instance a property owner’s annual premium under the federal program was $7,500, but a private company provided the same coverage with an annual premium of $1415.

While more mortgage lenders are accepting private flood insurance options as satisfying the mandate that certain homeowners purchase flood insurance, not all lenders are willing to do so because there is currently a lack of clarity in the federal law surrounding the issue. H.R. 2901 and S. 1679 would provide such clarity by redefining the legal definition of private flood insurance as a policy issued by a private insurer that is compliant with state laws and regulations. As the private flood insurance market develops, it is important to clarify that state insurance regulators have the authority and discretion to regulate private flood insurance as they have to evaluate other similar insurance products. States, after all, have over 140 years of experience supervising the business of insurance and balancing affordability with solvency.

Please consider co-sponsoring this legislation that would ensure lenders accept private flood insurance so PA consumers have more flood insurance options. More competition in the flood insurance market, as noted above, may lead to lower premiums for your constituents. Thank you for your consideration and do not hesitate to contact me if you have any questions on this or any other matter.



Teresa Miller

Insurance Commissioner


MEDIA CONTACT: Ron Ruman - 717-787-3289

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