Sept 19 (Reuters) - Allstate Corp Chief Executive Officer Tom Wilson on Tuesday called on U.S. lawmakers to overhaul a federal program that subsidizes flood insurance for homeowners, calling it a “bad” system that overburdens taxpayers.
Allstate, the second-largest U.S. homeowners’ insurer based on premiums collected, is concerned that efforts by lawmakers and advocacy groups to reform the National Flood Insurance Program (NFIP) will fall flat.
“The flood insurance situation needs to be completely redone,” Wilson said.
Lawmakers are wrestling with how to handle the NFIP’s expiration on Dec. 8. The program is $24.6 billion in debt to the U.S. Treasury and likely to face billions of dollars in additional costs in the wake of Hurricanes Harvey and Irma, which struck Texas and Florida in recent weeks.
“Once these hurricanes go past, once the tornadoes go past, people tend to have short memories,” Wilson said on the sidelines of an investor conference in New York organized by CECP, a coalition of chief executives that promotes corporate societal initiatives.
Wilson envisions a streamlined insurance system for floods and wind damage, instead of the current “patchwork” that relies on federal government-backed flood coverage and some state-backed insurers for wind and hail.
Insurers and reinsurers have been making similar arguments for years.
The NFIP was extended 17 times between 2008 and 2012 and lapsed four times in that period. A 2012 law extended the program to September.
Lower-risk property owners also need to be part of the system to make it function well, Wilson said.
“Not enough people buy it, and the people who do buy it use it more than they should,” he said, adding that the federal government sells the coverage for less than it is worth.
Allstate would consider selling private flood insurance if the system is fixed, he said.
“We insure all kinds of stuff,” Wilson said. “But it’s got to be a better market.” (Reporting by Suzanne Barlyn; Editing by Lauren Tara LaCapra and Leslie Adler)