Squawk Box - Flood Insurance

CNBC Aired on 6/23/2017 12:45:19 PM
welcome back, everybody. as tropical storm cindy pummels louisiana and texas the focus is back on flood insurance. possible regulatory changes could open the market up for private insurers let's bring in morgan brennan. and this has been something that's been very concerning part of the industry for awhile >> it certainly has. we could really say for the first time in five decades now, we have the private insurers poised to plunge into the deep end of the turbulent waters of flood insurance. the house lawmakers are looking to overhaul the government-run national flood insurance program. this is $25 billion in debt. it's set to expire september the bill would make it easier for insurers to compete. this is a move that could, at least in theory, bring down 8:46 AMrates and prevent more taxpayer losses so aig, chub, allianz, hci, they've already begun underwriting policies for homeowners and businesses. just this week hci announced expansion plans beyond florida to nine more states. and aig's lexington insurance unit says it has 10,000 policies and expects that to more than double in just the next year private insurers now account for an eighth of u.s. flood insurance market it was virtually zero before 2012's bigger waters act the last big attempt to revamp this market. and experts expect this to grow. it's a $3.3 billion market in terms of earned premiums about 5 million covered properties so it's not huge but it is a high growth opportunity. most interesting, it's not the low risk properties that are necessarily the most attractive to insurers, either. it's the ones where the rates, many of which had been subsidized, have already jumped so much in the last couple of years that private insurers say that they can now compete. >> this is really interesting. we're short on time but i want you to come back so we can talk more about this. because you want to open things up to competition but you want to make sure that they're offering the right rates so you don't wind up with a bankrupt insurer. good to hear big names >> yeah, it definitely is. and we're going to see where this legislation goes as it moves throughs house right now but we could see some very big changes in terms of places like florida, new jersey,