[Congressional Record (Bound Edition), Volume 158 (2012), Part 10]
[Senate]
[Page 13533]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        PRIVATE FLOOD INSURANCE

  Mr. CRAPO. Mr. President, I would like to discuss a provision of the 
Biggert-Waters Flood Insurance Reform Act of 2012 which reaffirms that 
private flood insurance can be used to satisfy a mandatory purchase 
requirement. This provision defines the term ``private flood 
insurance,'' and the definition makes a specific reference to private 
flood insurance from a surplus lines insurer in connection with 
nonresidential commercial property coverage. I would note, however, 
that insurance provided by surplus lines insurers also can cover 
residential properties--particularly when licensed and admitted 
insurers are unwilling or unable to provide the desired coverage--and 
this is authorized under state insurance law. The provision defines 
private flood insurance to include insurance provided by an insurer 
``licensed, admitted, or otherwise approved'' to engage in the business 
of insurance by a State. Surplus lines insurers, also sometimes known 
as nonadmitted insurers, are approved to conduct such business by 
States. Is it the understanding of the Chairman that the ``private 
flood insurance'' definition includes surplus lines flood insurance 
coverage?
  Mr. JOHNSON. I thank the Senator from Idaho for his question. The 
answer is yes--the definition of ``private flood insurance'' includes 
private flood insurance provided by a surplus lines insurer and is not 
intended to limit surplus lines eligibility to nonresidential 
properties. While the Senator is correct that surplus lines insurance 
is specifically mentioned in that context, overall the definition 
accommodates private flood insurance from insurers who are ``licensed, 
admitted, or otherwise approved'' in the State where the property is 
located.
  Mr. CRAPO. I thank my friend from South Dakota for this important 
clarification. This is an important issue, particularly in those 
limited high-risk areas where surplus lines insurance serves as an 
essential part of the homeowners insurance market. I agree with his 
reading of the statute, because state law already sets the parameters 
as to when surplus lines insurance is acceptable.

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