Washington is one step closer to allowing the creation of a flood insurance joint underwriting association (JUA), a publicly sponsored, temporary, not-for-profit insurer of last resort to provide flood insurance when the coverage becomes unavailable on the open market. The state Senate recently passed legislation that would allow the insurance commissioner to establish the JUA if necessary to insure property and businesses at risk from floods arising from the failure of a dam on the Green River.
Concerns about potential flooding below Washington’s Howard Hanson Dam have made it difficult for some businesses to find needed flood coverage in the Green River Valley, said state Insurance Commissioner Mike Kreidler.
According to the city of Kent, the Green River Valley industrial center is the second-largest wholesale distribution center on the West Coast, with gross business income of nearly $22 billion in 2007. The area is home to hundreds of businesses employing tens of thousands of people, the commissioner said, which is why he proposed the JUA legislation, SB 6240.
“I’m fully convinced, from every evidence that I have, that there is not an adequate market out there for the Green River Valley,” Kreidler said.
Daniel Holst, executive vice president for the Independent Insurance Agents & Brokers of Washington, said his membership is concerned about having adequate flood insurance markets for customers, but wants to ensure that the commissioner’s authority to form a JUA is restricted to the Green River Valley. “Our concerns is if there is a requirement for insurers to pay into a fund for business interruption or excess flood, especially for companies that have no interest in being part of excess flood, what impact that would have on the whole marketplace,” he said.
Washington lawmakers previously authorized joint underwriting associations for liability insurance for midwives and day care centers. Only the JUA for midwives is in operation.
The House companion bill, HB 2560, passed the bill to the Rules Committee for a second reading.
Topics Legislation Flood Washington
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