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Keiser bill could provide last-resort flood insurance for Green River Valley businesses
The Washington state Senate approved a bill Feb. 9 that could help as many as several hundred businesses in Kent, Auburn, Tukwila and Renton obtain hard-to-find supplemental flood insurance.
The Senate voted 30-18 to pass Senate Bill 6240. The legislation gives the state insurance commissioner authority to create a joint underwriting association if certain conditions are met. The joint underwriting association would act as a government-organized, non-profit insurance that could force insurance companies to provide insurance for businesses in the Green River flood zone.
The association, made up of insurance companies, would serve as an insurer of last resort for businesses that cannot find flood coverage.
Sen. Karen Keiser, D-Kent, co-sponsored the bill and said it could help several hundred companies obtain additional flood coverage insurance.
“It will help anyone with a business in the Kent Valley who has products and inventory in the $1 million range or more,” Keiser said in a phone interview Tuesday after the vote. “That’s a lot more businesses than you might think. Even a small machine shop has very expensive equipment on the floor.”
State Rep. Tina Orwall, D-Kent, plans to bring House Bill 2560, a companion bill to Keiser’s legislation, to the floor for a vote next week.
“I’m encouraged,” Keiser said about her hopes for passage of the House bill. “But things are always unpredictable in the Legislature.”
While basic flood insurance is available to homeowners and businesses from the federal government’s national flood insurance program, coverage is only offered up to $500,000 for a structure and $500,000 for contents. For many businesses, that amount doesn’t adequately cover the value of what they own.
“I think it could help tremendously,” Keiser said of the bill. “If it’s passed and becomes law, it will reduce the anxiety and create the stability that is needed in the business community.”
Sen. Claudia Kauffman, D-Kent, co-sponsored Keiser’s bill and called the vote a victory for businesses and workers in the Green River Valley.
“This is something that is urgent for South King County,” Kauffman said in a media release. “You can’t drive very far without seeing giant sandbags. It’s important we provide flood insurance that is desperately needed. It’s a wise decision and we wouldn’t be talking about this if insurance was easy to come by. It’s not.”
Keiser said the surplus insurance lines (for excess, specialized coverage) are offered through worldwide companies such as Lloyd’s of London rather than State Farm or other national insurance companies. But too few of the worldwide insurance companies offer flood insurance to Green River Valley businesses.
“Once they heard about the flood risk, they decided not to take it on,” Keiser said of the worldwide insurance companies. “They cancelled policies, did not renew policies or doubled or tripled the cost of policies.”
The worldwide companies that offer surplus insurance lines would not be part of the joint underwriting association because they fall under a different set of state regulations as companies that offer specialized lines of insurance, said Rich Roesler, spokesman for the state Office of the Insurance Commissioner.
State Insurance Commissioner Mike Kreidler, who requested the legislation, said in a media release that the bill would help protect Green River Valley businesses by allowing them to buy additional flood insurance, even if the policies could be expensive.
“It’s important to note that this insurance isn’t a giveaway,” said Kreidler. “JUAs are designed to be self-supporting. The coverage wouldn’t be cheap. But at least it would be available.”
Flooding remains a threat along the Green River because of a leak in an embankment next to the Howard Hanson Dam. The U.S. Army Corps of Engineers completed a grout curtain last fall as a temporary fix, but a permanent fix remains three to five years away.
The corps cannot store as much water as normal in the reservoir behind the dam. That means a heavy rainstorm could cause the river to overflow levees and flood local homes and businesses.
“The (insurance) market has failed because of the uncertainty of the dam and flooding,” Keiser said.
The bill includes an emergency clause so that if approved, it would take effect immediately.
“We’re talking about the potential loss of thousands of jobs and billions of dollars if catastrophic flooding occurs,” Kauffman said. “We can’t take that chance.”
For more information on the Joint Underwriting Association bill, go to http://apps.leg.wa.gov/billinfo and search for either House Bill 2560 or Senate Bill 6240.
Senate flood bills
In addition to Senate Bill 6240, the Senate passed two other bills Tuesday related to flood protections on identical 48-0 votes:
• Senate Bill 6286 would give flood control zone districts and cities the same immunity from tort claims that counties possess, to make sure these governments can address emergency needs without being impaired by fears of liability.
• Senate Bill 5704 expands the allowable size of flood plain districts to three or more counties. This allows the creation of a district large enough to span the Green River basin, which is 90 miles long and stretches through 11 counties.
Under the legislation, the insurance commissioner must begin by forming a market assistance plan to help affected businesses. Underwriting operations can’t begin until the commissioner finds that:
• A market assistance plan is inadequate because fewer than four admitted or surplus line insurers are offering excess flood insurance, exclusive of personal insurance.
• People, businesses, or service providers cannot buy excess flood insurance through the voluntary market; or
• So few insurers sell excess flood insurance that a competitive market does not exist.
Other provisions include:
• Coverage of any one policy may not exceed $5 million and the total amount of all coverage offered by the association may never exceed $250 million.
• A seven-member governing board will be created to oversee the JUA.
• The association must dissolve after a period of five years unless the Legislature authorizes an extension.