Alaska proposes state-run flood insurance to replace NFIP coverage

New program could lower premiums by reflecting local flood risks more accurately

Alaska proposes state-run flood insurance to replace NFIP coverage

Catastrophe & Flood

By Kenneth Araullo

Alaska legislators are reviewing a proposal to establish the Alaska Flood Authority, a nonprofit entity designed to provide flood insurance coverage that could serve as an alternative to the National Flood Insurance Program (NFIP).

The initiative, outlined in Senate Bill 11, aims to create a state-administered flood insurance fund tailored to Alaska’s specific flood risks.

The proposed Alaska Flood Authority would consist of all insurers licensed to write property insurance in the state. As a self-governing body, the authority would oversee the flood insurance program and manage claims, though it would remain under the regulatory oversight of the state’s insurance director.

Policies issued under the program would mirror the NFIP’s coverage terms, including coverage amounts, deductibles, exclusions, and conditions. Under the bill, residential properties could receive up to $1 million in coverage, while commercial properties would have a $2 million coverage limit.

Additionally, the policies would not require floodwater to cover a specific amount of normally dry land before claims could be filed.

Funding for the program would come exclusively from collected premiums, with no state subsidies involved. The bill’s sponsor, Republican state Sen. Bert Stedman, who represents Alaska’s Southeastern coastal District A, said that the program would be structured to more accurately reflect Alaska’s flood risk compared to the national rating system used by the NFIP.

Stedman criticized the federal flood program’s rate structure, noting that Alaska residents pay premiums disproportionate to their actual risk. He argued that Alaskans have been subsidizing higher-risk flood zones in other parts of the country, such as the Gulf of Mexico, the Mississippi River basin, and the Carolinas.

He cited the community of Sitka as an example, explaining that it has participated in the NFIP since the late 1970s but has experienced few flood-related losses.

“It’s not going to be from a high tide with wind behind it,” Stedman said in a report from AM Best. “There have been high tides with wind behind them for eons. When people build on the waterfront, they compensate for that.”

Stedman added that significant flood damage in his district would more likely result from a catastrophic event, such as a tidal wave, rather than typical high tides or storms. He emphasized that local waterfront construction practices already account for common tidal and weather patterns.

He also highlighted that most Alaska communities have planning authorities with the power to limit development in high-risk areas through zoning regulations. He said these authorities manage local risks, including those related to flooding, through zoning controls.

If passed, Senate Bill 11 would take effect on July 1, 2026. The Alaska Flood Authority would be required to submit a detailed plan of operation by Jan. 1, 2027. Upon receiving the plan, the state’s insurance director would be authorized to implement regulations necessary to administer the program.

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