PIA Applauds House Passage of Flood Insurance Bill, Urges Improvements in the Senate
WASHINGTON, Friday, July 16, 2010 - The National Association of Professional Insurance Agents (PIA) applauds the House of Representatives for passing the Flood Insurance Reform and Priorities Act of 2010 (H.R. 5114). The bill was approved by a vote of 320-90.
"The overwhelming margin of approval demonstrates that there is very broad support for the National Flood Insurance Program (NFIP) and for common-sense reforms to make it better," said PIA Executive Vice President & CEO Leonard C. Brevik. "The five year reauthorization included in the bill will provide the certainty needed to ensure that the flood insurance program continues to provide affordable protection to homeowners and business owners without needless interruptions. We urge the Senate to follow suit and approve H.R. 5114, with some improvements."
Among the reforms to the flood insurance program made by the bill include the phasing out of subsidized premiums for severe repetitive loss properties, substantially damaged or improved properties and policyholders who voluntarily allow flood coverage to lapse. In addition, mitigation programs are strengthened by clarifying that the director of FEMA may work with property owners to make mitigation grants for certain repetitive loss properties where states or communities are either unable or unwilling to address repetitive loss issues with a property owner.
"The leadership of the bill's author and principal sponsor Rep. Maxine Waters (D-Calif.) was key to passage of this legislation which makes much-needed, positive reforms to the NFIP while providing it with the certainty of a full, five-year reauthorization," said PIA Director of Federal Affairs Mike Becker. "There are elements of the bill that should be improved when it goes to the Senate, but overall this is a very positive result and PIA remains supportive of H.R. 5114."
An amendment included in the bill requires NFIP Write Your Own (WYO) insurers to agree that they will not use "anti-concurrent causation" language to exclude coverage of wind damage because there is also flood damage to a property should be removed by the Senate. The amendment was offered by Rep. Gene Taylor (D-Miss.).
"When the Senate considers H.R. 5114, we hope that this amendment is removed," Becker said. "PIA agrees with remarks made on the House floor by Rep. Shelly Moore Capito (R-W.V.) that the amendment could interfere with state regulation of insurance. In addition, it would serve as a disincentive for carriers to participate in the program by increasing the risk of loss."
Rep. Taylor characterized as "absurd" a decision by the House parliamentarian that another amendment he offered, which would add wind coverage to the NFIP, was not germane to H.R. 5114 because the bill is about flood insurance, not wind insurance. Next week, Rep. Taylor's Multiple Peril Insurance Act of 2009 (H.R. 1264) will be debated on the House floor. It would amend the National Flood Insurance Act of 1968 to require the NFIP to enable the purchase of multiperil coverage and optional separate windstorm coverage.
PIA opposes adding wind coverage to NFIP policies. Currently, only flood insurance is covered by the NFIP, while wind insurance is covered under homeowner's insurance and statewide wind pools. PIA is concerned that adding wind to the NFIP would cause confusion and could be viewed as an attempt to get Congress to pay for wind damage connected to hurricanes that may currently be a legal obligation under the current wind damage terms of property policies. This would risk expanding rather than reducing the debt of the NFIP.
Rep. Taylor has been critical of the insurance industry since he lost his home to Hurricane Katrina in 2005 and became dissatisfied by the way his insurer, State Farm, handled his claim. Taylor and then-Sen. Trent Lott (R-Miss.), both sued State Farm and later settled out of court.
Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America (SM). PIA's web address is www.pianet.com.