Private insurers should carry more of the burden of writing flood insurance than the federal government, Chubb Ltd. Chairman, President and CEO Evan Greenberg said at an S&P Global Ratings insurance conference.
Greenberg said the National Flood Insurance Program, currently administered by the Federal Emergency Management Agency, is under more than $30 billion of debt because the federal government does not know how to "charge the right risk" in underwriting policies.
He slammed the government's approach to flood insurance, saying that it "encourages people to live in places they shouldn't" by heavily subsidizing flood-prone properties' insurance policies and the lack of funding for flood mitigation infrastructure.
As a result, the CEO said, private insurers should be allowed more room to write more policies.
"Society needs the expertise and capacity of private insurers," Greenberg said.
"Armed with sophisticated modeling and mapping, as a result of technological advancements, private insurers today are far more capable of shouldering a major portion of flood insurance responsibility," he added.
But Greenberg said there is still a role for the federal government in insuring against flood events. He said it should be an "insurer of last resort," helping consumers who are unable to move out of flood zones either through buyouts, subsidized premiums or as a "backstop insurer" for major flood events that exceed private insurer capacity.
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