With large-value flood insurance scarce in the Green River Valley, OIC considers revisiting joint underwriting association legislation...

As businesses in the Green River Valley find it very hard indeed to find coverage above the $500,000 building/$500,000 contents maximum for federal flood insurance, our office is considering revisiting a proposal that would have given us broader powers to help.

In 2003, the insurance commissioner’s office asked the state Legislature for broader powers to create “joint underwriting associations” in cases where coverage effectively disappears. More than two dozen states have comprehensive JUA laws.

Here’s how they work: When coverage dries up, such laws allow the insurance commissioner to intervene and order insurers to band together to provide start-up financing and guarantee solvency for a joint underwriting association. The JUA then functions as a not-for-profit insurer of last resort. The coverage may be expensive, but at least it will be available. (Mostly, that is. Such associations can refuse to cover the very few applicants who present extraordinary risks.)

As things stand now, state law requires that the insurance commissioner get approval from the state legislature before establishing such an association. The 2003 legislation – House Bill 1582 – would have allowed the Office of the Insurance Commissioner to move ahead, under certain conditions, to directly order creation of such groups.

Insurers in 2003 opposed the bill, which died in committee. But with business owners struggling to find coverage in the Green River Valley and many millions of dollars in uninsured property in the potential flooding area, it may be time to revisit the issue.

(Note: I modified this post to clarify and describe a bit more about how JUAs work.)