FEMA Takes Over Thousands of State Farm Flood Policies
With the federally backed National Flood Insurance Program’s future unclear, a variety of reform proposals on the table, and a deadline for re-authorization approaching, the Federal Emergency Management Agency (FEMA) has taken the unusual step of assuming responsibility for administering thousands of policies dropped by private insurance company State Farm. InsuranceNewsNet has the story (“ US Flood Program Expanded as Lawmakers Deliberate Larger Private Role,” by Sean P. Carr). “State Farm Fire & Casualty Co. announced its withdrawal from the flood program in June 2010 (BestWire, June 8, 2010),” the website reported. “When it formally left in September of last year, it had 786,552 flood policies. Since then, some 731,000 have been transferred to the NFIP. The remainder will be transferred over the next few months, State Farm spokesman Phil Supple said. The federal program has a total of 5.5 million policies.” FEMA’s move drew criticism from the insurance industry. Ben McKay, senior vice president of federal government relations for the Property Casualty Insurers Association of America, said that FEMA should have transferred the policies to other private underwriters. McKay called taking the additional policies on "probably the largest increase in any program in all of government in the past year.”
