June 28, 2022

Volume XII, Number 179


June 27, 2022

Subscribe to Latest Legal News and Analysis

Florida's Move to Establish a Stronger Private Flood Insurance Market Provides an Opportunity for Insurers, Developers and Property Owners

The Biggert-Waters Flood Insurance Reform Act of 2012

In 2012, Congress passed a law to reform the National Flood Insurance Program (NFIP) to make the program self-supporting without federal subsidies. Specifically, the law called for local flood maps to be updated.  Existing subsidies and discounts would be phased out. New rates which would reflect the actual risk from flooding would be established and implemented over five years. Additionally, the new law allows for higher policy limits. 

In the past, certain property owners in high risk areas known as special hazard flood zones have been charged premiums that do not reflect the full flood risk. Further, only properties known as “pre-FIRM”, meaning the property was built before the community adopted its first flood insurance rate map (FIRM) (1971), were eligible for subsidies unless they underwent substantial improvements post-FIRM. Currently, nearly 20 percent of NFIP policies are subsidized throughout the nation. In Florida, a hurricane prone region, the percent is much higher.

While the total effect of the new law remains to be seen, many Floridians and their businesses are expected to experience substantial increases in their flood insurance rates. Properties affected by the new law include:

  • Non-primary residences;

  • Businesses (those that produce income, used as office or retail space, wholesale, hospitality or similar uses);

  • Federal, state and locally-designated historic structures (commercial and residential)  that are not primary residences;

  • Properties with one to four residences;

  • Multi-family properties (Five or more units);

  • New policies after July 6, 2012; and

  • Lapsed pre-FIRM policies on or after October 4, 2012.

 Subsidized premiums for primary residences in Special Flood Hazard Areas will be able to keep their subsidized rates unless or until:

  • The property is sold;

  • The policy lapses;

  • The insured property suffers severe, repeated flood losses where the owner refuses an offer to mitigate; or

  • A new policy is purchased.

State of Florida Reaction 

Dismayed by the effect the law would have on their constituents, Florida legislators called on the Office of Insurance Regulation (OIR) to provide an overview of the effect the new law would have on Floridians. 

Currently, Florida policies make up 37 percent of the total policies in the NFIP (more than two million policies). Of those, 87 percent (1.78 million policies) have nonsubsidized rates. Thirteen percent (268,500) have subsidized rates. Those Floridians holding the 268,500 policies will see significant increases in their premiums when the law takes full effect. Below is a further categorization of the subsidized Florida NFIP policies:

Type of Property

Percent of Subsidized Policies

Expected Premium Increase

Non-primary residences, businesses and severe repetitive loss properties


(50,500 policies)

Immediate 25% increase

Currently subsidized primary residences


(103,000 policies)

No change unless or until a trigger event (map change, sell home, policy lapse)

Currently subsidized condos, non-condo multi-family residences


(115,000 policies

No change until FEMA develops guidance for removal

The Florida Senate Committee on Banking and Insurance met in November to hear from businesses and homeowners on the law’s effect. Florida realtors testified that the anticipated end of the federal flood insurance subsidies could devastate the state’s economy. As a stop gap measure, Florida legislators have called upon Congress to postpone implementation of the new law. However, committee members seemed most interested in changing current regulations to give private insurers more flexibility in offering flood coverage.

Florida Regulatory Action   

An informational memorandum was distributed to insurers by the Florida Office of Insurance Regulation (OIR) to assist those insurers exploring the feasibility of writing primary flood coverage in the state. The memorandum provided a review of the federal and state requirements that would affect issuing private flood coverage and provided suggestions to assist with the state filing process.

In December, Sen. Jeff Brandes (R-St. Petersburg) and Rep. Larry Ahern (R-St. Petersburg) filed legislation designed to encourage private insurers to enter the Florida market. Specifically, the bills would:

  • Authorize a private flood insurance policy to be written with multiple options for minimum coverage in differing categories such as

  • Deductibles of any range of agreed upon value between the insured and insurer;

  • Using either the replacement cost value, or actual cash value of the insured property that is to be replaced or repaired;

  • Restricting coverage to the principal structure on a property if multiple structures exist;

  • Coverage amounts as low as the outstanding balance of the property’s mortgage;

  • Allowing exclusion of contents coverage, additional living coverage, and ordinance/law coverage; and

  • Allowing for surplus lines insurers to export policies without the three declamations required in current law.

The legislation would also:

  • Add an expert in floodplain modeling to the Hurricane Loss Modeling Commission and allow the Commission to review floodplain models used in private flood insurance;

  • Provide flexibility in how private insurers reach their actuarial models regarding flood loss. Retain the authority of OIR to review and approve flood insurance rates.

  • Allow rates to be set through the established individual risk rate setting in current law

  • Ensure that the insured retains the right to choose a rating method agreed upon between the insurer and the insured that is not reviewed by the OIR after explicit consent

  • Require flood insurers to submit a Plan of Operations and Financial Protections and applicable revisions to plans as required by the OIR for solvency, unless the insurer maintains a $35 million surplus.

©2022 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume IV, Number 10

About this Author

Augustin Corbella, Greenberg Traurig Law Firm, Tallahassee, Media and Entertainment, Insurance Attorney
Senior Director

Agustin G. Corbella is an attorney in the Government Law & Policy Practice of the firm's Tallahassee office. He joined the firm with a formidable background in state and federal government, as well as state and national campaigns. Prior to joining the firm, Gus served as Chief of Staff to the Florida Senate President, staff director for the Majority Offices of both the Florida Senate and House of Representatives, and worked for a Member of the United States Congress. His role as chief advisor to government's most prominent leaders has provided Gus with a broad...

Leslie Dughi, Greenberg Traurig Law Firm, Tallahassee, Government Policy and Insurance Law Attorney

Leslie Y. Dughi's state lobbying and advocacy practice spans more than 20 years and includes all areas of the executive and legislative branches of government. From her representations, Leslie has gained in-depth knowledge on the inner workings of Florida government. In addition to her lobbying experience, Leslie has considerable experience in political communications, serving as the Political Director for Associated Industries, Florida’s largest statewide business association. Throughout her career she has coordinated numerous grassroots advocacy campaigns for business...

Robert Fine, Greenberg Traurig Law Firm, Miami, Construction, Environmental and Real Estate Law Attorney

Robert Fine Chairs the ADA, Accessibility, Building & Life Safety Codes Practice and is a board certified construction law attorney and a Florida-registered, nationally certified architect. His practice focuses on land use, zoning, historic preservation, environmental, and administrative law. Robert’s work ranges from representation before local governments for zoning and other development approvals to building code appeals, code enforcement and unsafe structure defense; and at a state level, petitions for declaratory statements, lobbying for and challenging building...