The Legislature has approved a bill to help commercial businesses obtain hard-to-find supplemental flood insurance, potentially preventing tens of thousands of jobs from being lost in the event of a major flood.
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 per structure and $500,000 for contents. That’s not enough to cover a lot of the heavy machinery businesses use. Likewise, distributors in the Green River Valley, the second largest distribution center on the West Coast, must have business-interruption insurance, which is not available through the federal program. Businesses have complained that insurance has not available in the surplus market.
HB 2560 , sponsored by Rep. Tina Orwall, D-Normandy Park, gives the state insurance commissioner authority to create a joint underwriting association if certain conditions are met. The insurance commissioner must begin by forming a market assistance plan to help affected businesses. Underwriting operations can begin only after the commissioner finds that:
• A MAP 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; and
• So few insurers sell excess flood insurance that a competitive market does not exist.
Sens. Karen Keiser, D-Kent, Claudia Kauffman, D-Kent, and Tracey Eide, D-Federal Way, call the legislation a victory for businesses and workers in the Green River Valley who have experienced anxiety and uncertainty because of the potential for flooding and the lack of surplus flood coverage. Keiser sponsored a companion bill in the Senate.
“This bill is and always has been about preserving tens of thousands of good jobs and avoiding more damage to the state’s economy,” Keiser said. “Flood losses have a ripple effect throughout the entire state economy; they drive up unemployment. Doing nothing is simply not an option. This is good legislation that offers some measure of protection.”
Kauffman stressed the commitment of elected state officials to fix the insurance issue.
“We want to do everything we can at the state level to help residents and businesses deal with this ongoing problem,” Kauffman said. “The success of this bill is due to the hard work of local, state and community leaders and my colleagues in the House. This bill will help protect 86,000 jobs.”
Eide spoke to how critical Green River Valley commerce is.
“Commercial businesses are the lifeblood of our local economy, and many of have been living in fear that flooding will wipe them out,” Eide said. “This bill will help more businesses obtain coverage, because the flood threat isn’t going away anytime soon. Right now, only about 46 percent of business owners along the Green River Valley have flood insurance. That needs to change.”
Other provisions of the bill include:
• Excludes personal insurance from both participation in the JUA and from being assessed in the case of catastrophic losses not covered by premiums.
• 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.
HB 2560 passed 28-17 and now goes to the governor’s desk for signature.
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