WA Senate approves "joint underwriting association" bill to help businesses in flood plain get insurance

The Washington state Senate on Tuesday approved legislation to help businesses located below a weakened dam find flood insurance.


“This is a critical bill to protect businesses in King County’s Green River Valley,” said Insurance Commissioner Mike Kreidler, who requested the legislation.

“This valley is a vital area of the state’s economy, and it’s difficult if not impossible for some businesses to find enough flood coverage there right now,” Kreidler said. “We don’t want employers leaving because they can’t protect themselves against this risk.”

Senate Bill 6240 would allow the insurance commissioner’s office to set up a “joint underwriting association” or JUA. The association, made up of insurance companies, would serve as an insurer of last resort for businesses that cannot find flood coverage.

The bill passed the Senate, 30 to 18. A similar bill, House Bill 2560, is currently in the state House of Representatives.

According to the U.S. Army Corps of Engineers, a weakened abutment adjacent to the Howard Hanson Dam means that the dam cannot hold back as much water as usual. Corps officials have said that the need to release that extra water means that the flood risk below the dam is about 1 in 33.

The heightened flood risk has apparently led to a sharp contraction in the local insurance market, Kreidler said. Federal flood coverage is still widely available for both homes and businesses, but only covers up to $500,000 in commercial property and $500,000 in contents.

For many businesses in the heavily industrialized valley, that’s not enough coverage. Nor does the federal flood program offer business-interruption coverage, which is critical in a major manufacturing and distribution area like the valley.

“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.”

The state already has a JUA set up to provide insurance for midwives. Lawmakers approved another one for day care programs, but it was never used. The regular insurance market rebounded before it was needed.

At least 24 other states have passed similar legislation.