Relating to private flood insurance, and including future repeal provisions

This bill establishes the “Private Primary Residential Flood Insurance Model Act” to provide for the protection of lives and property from floods, and to encourage a private primary residential flood insurance (primary flood) market to provide consumer choices and alternatives to the existing national flood insurance program (NFIP). “Primary flood” is defined in the bill as an insurance policy covering losses from flood to residential property, other than commercial property, written in this state by any authorized insurer (insurer) and that is not written to apply coverage in excess of the coverage provided under another flood insurance policy, including one issued by a private insurer or by the NFIP. “NFIP” and “authorized insurer” are also defined in the bill. The bill does not restrict the use of existing filings by insurers, or limit the ability of insurers to provide flood insurance coverage of any type other than primary flood. Rates established for flood insurance are not subject to prior approval by the commissioner of insurance (commissioner). An insurer must attest that all rates are based on criteria as detailed in the bill, and the commissioner may audit an insurer’s rates to ensure compliance. An insurer must file all rates and any changes to rates as detailed in the bill. §4012a(b) and applicable regulations. At least days prior to writing primary flood, an insurer must notify the commissioner of the insurer’s intent to sell primary flood, and file a plan of operation and financial projections. Before placing an applicant whose property is located in a hazard area with primary flood, an insurance producer, surplus lines broker, or an insurer must provide notice to the applicant of the existence of the NFIP if the applicant does not currently have flood coverage under the NFIP; and that coverage under the NFIP may be provided at a subsidized rate and that the full-risk rate may apply to the applicant’s property if the applicant later seeks to reinstate coverage under the NFIP. These requirements are repealed days after enactment of federal legislation mandating that an insured may switch between private flood insurance and flood insurance under the NFIP without penalty. The commissioner must notify the Iowa Code editor if such legislation is enacted. The requirements for the cancellation and nonrenewal of primary flood are detailed in the bill. Diligent search requirements do not apply to flood coverage under an insurance policy issued by an eligible surplus lines insurer until the commissioner certifies in a bulletin or an order that the admitted private flood insurance market is adequate. Writing flood insurance does not constitute participation in the property insurance market for purposes of determining membership in the FAIR plan. “FAIR plan” is defined in the bill. §4012a(b)(7) and corresponding federal regulations. Upon disposition, all rates, supplementary rate information, and supporting information filed with the commissioner are a public record under Code chapter 22, except information marked by the insurer or the filer as confidential, trade secret, or proprietary, and that is accepted by the commissioner. Notwithstanding any law to the contrary, with respect to regulation of flood coverage written in this state by an insurer, the bill controls. The commissioner may adopt rules to administer the bill.