The New York Flood Insurance Association

Official Point Of View

By New York State Assemblyman Phil Goldfeder

Nearly a year ago, I wrote in these pages that rising flood insurance premiums threatened to drown our community and force our families out of the neighborhoods that we know and love. Sadly, not only are we still facing this threat, but it has grown even worse.

Recent reports confirm what we in Rockaway and Broad Channel already knew – that insurance companies acted fraudulently to protect their own bottom line. Meanwhile, without action in Washington, the delays to the harmful Biggert-Waters Act of 2012 will expire and our premiums could potentially rise thousands of dollars in the coming years. Worse than any future storm, our families fear these mounting costs will lead to our ultimate demise.

Now is the time to act. That’s why I have recently introduced legislation to create the New York Flood Insurance Association (NYFIA). This joint underwriting association would give homeowners a choice by providing an alternative to the broken National Flood Insurance Program (NFIP) run by FEMA. Under my proposal, we would create a system that requires insurers to put some skin in the game and pool risks to help lower flood insurance premiums for our families.

There is a strong precedent for this idea. In the late 1960s, when increased crime, civil unrest and urban decay threatened the very existence of New York and city centers around the country, many property owners found themselves unable to obtain fire insurance on the private market. With the insurance companies shirking their responsibilities to property owners, the state stepped in. We created the New York Property Insurance Underwriting Association in 1968 as an entity that would help pool risks and offer New Yorkers an alternative to the private market. This association still exists to this day and has since served as a model to the nearly 30 state joint underwriting associations now operating around the country. It is time for us to lead again.

With NYFIA, we hope to offer a similar option to homeowners in flood-prone communities around the state. Under the proposed law, association members (the insurers) would be required to offer “economical, fair and non-discriminatory administration” of flood policies and adhere to “reasonable and objective” underwriting standards. Any New Yorker who has made a diligent effort to find coverage through the private market would be eligible to apply, regardless of where they live.

What sets this program apart from the current system run by FEMA is that NYFIA would require insurance companies to share not only in the profits, but also the losses year-to-year. Unlike the NFIP, which since 1987 was stripped of its ability to save and reinvest its budget surplus, NYFIA would help provide a surplus to insurers that can help offset costs during bad times. This will ultimately help lower premium costs for homeowners and prevent many of the unscrupulous practices we saw during Sandy.

Introducing this legislation is only the first step. I have been consulting with community leaders to hear local concerns to take into account what our local families need most. At the same time, as a newly-appointed member of the Assembly Insurance Committee, I am working with the state’s foremost experts in insurance policy to ensure the strongest system possible. I am fortunate to have the support and expertise of Republican Senator James Seward, the chair of the influential State Senate Standing Committee on Insurance. With this bipartisan support, I am hopeful that we can pass this in the legislature and make NYFIA the law of the land.

I was born and raised in Rockaway and now my wife and I are raising our two young children here. I want to ensure that my children, like every family in Rockaway, can afford to live in their own neighborhood and grow up to raise their own families here. Every family deserves relief from the crushing burden of rising flood insurance premiums, especially when so many still struggle to recover from Sandy. By creating the New York Flood Insurance Association, we can keep our communities affordable and ultimately provide families with the relief they deserve so that they can continue to grow strong right here in Rockaway
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