WASHINGTON (March 17, 2010) The National Association of Mutual Insurance Companies (NAMIC) today offered comments in response to a recent report critical of the National Flood Insurance Program and ongoing flood map modernization efforts.
“The National Flood Insurance Program provides protection for millions of homeowners and businesses across the country,” said Kathy Mitchell, federal affairs director for NAMIC. “While not perfect, suggesting that homeowners are being ‘fleeced’ when they purchase this coverage is irresponsible and potentially dangerous.”
The National Flood Insurance Program was established in 1968 to cover flood losses as an insurance risk, rather than as part of post-disaster federal aid. Because of the unpredictable nature of floods, which can happen anywhere or any time, the private insurance market was unwilling to offer coverage, or could only do so at a high premium. “Without the NFIP many homeowners would be vulnerable to the risk of losing their home to a flood and being left to pay for repairs or reconstruction as well as their ongoing mortgage payments,” Mitchell said.
Many mortgage lenders require borrowers to obtain flood coverage with their mortgage to protect against flooding of the property.
“For years now, the property/casualty insurance industry has been leading the call for reforms that would make the NFIP better able to serve those who need it,” Mitchell said. “While many floods are caused by hurricanes or tropical storms, flooding can happen anywhere and any time, regardless of what has happened in the past. Flood insurance is sold by the NFIP throughout the United States for that reason.”
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