Senate committee opens discussion on state-run flood insurance, hears split testimony

Senator Stedman, sponsor of Senate Bill 11, told the Senate Labor and Commerce Committee on Feb. 17 that the bill seeks a ‘‘solution to the flood insurance program in Alaska’’ because premiums ‘‘far exceed the losses that we've had’’ and federal requirements imposed through FEMA and the National Flood Insurance Program (NFIP) have created burdens for coastal communities.

The bill would authorize a state-run program to provide flood coverage tailored to Alaska’s geographic and risk profile. ‘‘We're a big state geographically, a minuscule state with population, and I don't think we're being fairly treated,’’ Stedman said, framing the legislation as an effort to reduce premiums and to limit federal building‑code restrictions that, he said, ‘‘directly push back development of our shorefront.’’

The committee heard from Laurie Wing Hyer, director of the Division of Insurance, who described the technical challenges such a program would face and emphasized participation levels as central to viability. ‘‘I think key is gonna be the take up — how many people are gonna buy from this program, and will it support itself?’’ Wing Hyer said, noting Alaska currently has low take‑up for private flood coverage and that the state has no captive‑insurance law to host captive pools domestically.

Public testimony emphasized different priorities. Lisa Bush, formerly executive director of the Sitka Sound Science Center, said regional landslide and debris‑flow risk in Southeast Alaska makes insurance questions urgent: ‘‘…people want to know about where they can get insurance, if they can get insurance, and how insurance works.’’

Laura Curtis, representing the American Property Casualty Insurance Association, urged the committee to reject SB 11. Curtis said flood coverage is already available through the NFIP and private carriers and warned a mandatory, state‑run residual market could ‘‘create availability issues’’ and place the state at substantial fiscal risk. She noted the bill would authorize up to $10 million in state funds to cover losses if premiums proved inadequate and recommended directing funds to mitigation and to encourage more communities to participate in the NFIP instead.

Committee members asked technical questions about the new FEMA flood maps scheduled to take effect at month’s end and about adverse selection and captive‑pool structures. Wing Hyer and the sponsor agreed many details — rates, take‑up assumptions, and whether pools should be statewide or community‑specific — remain to be resolved. The committee did not take a final vote on SB 11 and set the bill aside for further consideration.

The committee record shows no formal vote on SB 11 at the Feb. 17 meeting; senators and witnesses signaled it will be a multi‑year policy process with further technical analysis and input from the Division of Insurance and affected communities.

Looking ahead, the committee indicated it will solicit additional technical analysis from the Division of Insurance and monitor community participation in the NFIP as staff and legislators refine policy options.