Insurance Space

If the Green River rises over its banks, there’s a chance that people all over Washington could help pay for the damage.

State leaders are contemplating the creation of a state-run insurance pool that would help businesses in Kent, Auburn and other communities along the river.

The companies have struggled to find insurance companies that will sell them flood insurance since rains last year weakened a hillside next to Howard Hanson Dam.

The state Senate voted 30-18 Tuesday to authorize the state insurance commissioner to create such a “joint underwriting association.” Senate Bill 6240 now goes to the House.

Businesses can buy federal insurance covering up to $500,000 of their potential losses for a building and another $500,000 for its contents. But lawmakers say some of the businesses in the valley face the threat of much higher losses if the Army Corps of Engineers is forced to release water from the dam.

“They are tempted to move out – out of the valley, out of the state,” said Sen. Karen Keiser, D-Kent.

The floods threaten an area of South King County that is a major regional warehousing hub as well as a home to factories and corporate offices.

Some businesses in the area have lost their private flood coverage that supplements the federal insurance, said Andrea Keikkala, director of the Kent Chamber of Commerce.

Without flood insurance, Keiser said, they’re unable to lease or buy buildings in the area. And Insurance Commissioner Mike Kreidler said companies are unable to buy business-interruption insurance that will pay them if they’re forced to shut down during a flood.

Premiums in a state-run pool might be expensive, but they would cover that risk. Under the Senate proposal, Kreidler could form a pool to sell policies covering up to $5 million in damages for a single business and up to $250 million total across the Green River Valley.

The insurance pool would be funded by premiums from participating businesses. If it ran out of money to pay claims, it would charge the state’s insurance companies, which could pass the cost on to all their policyholders.

Republicans said it’s not fair to make the whole state pay to protect companies in one region.

“You may now see your premiums go up so we can protect the interest of businesses that didn’t bother to buy flood insurance in a flood plain,” GOP deputy leader Cheryl Pflug said.

Kreidler said there’s low probability of a flood big enough to put heavy costs on insurers and their customers.

And flooding “presents a potentially disastrous outcome for the state’s economy and jobs, which would obviously impact just about everybody anyway,” he said.

Senate Democrats say there are more than 113,000 employees in the area and that a one-day shutdown of businesses there could mean a $46 million economic hit.

Before forming the pool, Kreidler would have to convene insurance companies and determine that they aren’t offering flood insurance. The bill calls for the pool to dissolve after five years.

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Tags: federal insurance, Insurance