The Independent Insurance Agents & Brokers of America today praised Congress for passing the “Biggert-Waters Flood Insurance Reform and Modernization Act of 2012.” The legislation will extend the National Flood Insurance Program (NFIP) for five years and make reforms to the debt-ridden program.
The bill was passed as part of a Conference Report package along with the Surface Transportation Act of 2012 and an extension of the Federal Direct Stafford Student Loan program.
The House passed the bill 373-52 and sent the measure to the Senate, which passed it, 74-19. President Barack Obama is expected to sign it into law.
The measure is named for Reps. Judy Biggert, R-Ill., and Maxine Waters, D-Calif., the chair and ranking member of the House Financial Services Subcommittee on Insurance.
“The Big ‘I’ commends the House and Senate for today’s action on flood insurance,” said Robert Rusbuldt, Big “I” president and CEO. “A five year extension is of the utmost importance, as are the needed reforms to the program. The Big ‘I’ strongly supports the legislation passed today and looks forward to the implementation of the many provisions that will help put the program on more solid financial footing.”
In addition to reauthorizing the NFIP for five years, until Sept. 30, 2017, the legislation includes reforms to modernize the NFIP. These include phasing out subsidies for many properties, raising the cap on annual premium increases from 10 percent to 20 percent, allowing multifamily properties to purchase NFIP policies, imposing minimum deductibles for flood claims, requiring the NFIP administrator to develop a plan for repaying the debt incurred from Hurricane Katrina, and establishing a technical mapping advisory council to deal with map modernization issues.
The legislation would also require the Government Accountability Office (GAO) to conduct a study on the prospect of adding business interruption and additional living expenses coverages to the NFIP — which IIABA supports — and would require the Federal Insurance Office (FIO) to study and submit a report to Congress on natural disaster insurance issues and possible legislative solutions.
U.S. Senator Roger Wicker, R-Miss., said the final measure includes his COASTAL Act that uses scientific data to help determine water damage following a major hurricane. His amendment would use hurricane data collected by the National Oceanic and Atmospheric Administration (NOAA) in conjunction with engineering formulas to be developed by FEMA to assess flood insurance claims for total-loss, “slab” properties.
Wicker said use of the COASTAL formula will help “prevent the inappropriate shifting of wind claims to the flood program and will empower consumers by providing a better estimation of wind versus water losses.”
“Both the House and Senate should be commended,” said Charles Symington, Big “I” senior vice president of government affairs. “This legislation has been a top priority of the Big ‘I’ for almost seven years, and we are very proud today that Congress has finally passed this balanced, bipartisan bill that will provide long-term protection for both consumers and taxpayers.”
Insurers, too, welcomed the news.
“For far too long, NFIP reforms were frustrated by partisan politics and personal agendas,” said Charles M. Chamness, president and CEO of the National Association of Mutual Insurance Companies (NAMIC). “Today’s passage of a long-term reauthorization and common-sense reform brings those difficulties to an end, and ensures that Americans will be able to protect themselves against flood losses while reducing the risk to the taxpayer.”
Jimi Grande, senior vice president of federal and political affairs for NAMIC, said the legislation “has long been a source of frustration” for the property/casualty insurance industry in Washington.
In recent years, the NFIP has been maintained through a series of short-term extensions, with lapses to the program occurring on numerous occasions. During a lapse, no new flood insurance policies can be written, which causes delays or cancellations for real estate sales in which flood protection for the property is required. Had Congress not acted, the program would have lapsed again at the end of July.
“After years of uncertainty, today’s passage helps bring the National Flood Insurance Program closer than ever to financial stability,” said Chamness. “These common sense, bipartisan reforms benefit home buyers and sellers, policyholders, communities and taxpayers.”
Tom Santos, vice president for federal affairs at the American Insurance Association (AIA), praised Congress for recognizing that “reforms including movement toward fiscal soundness by eliminating premium subsidies, and moving toward risk-based pricing are necessary for the long-term stability of the program.”
Santos said the five-year extension will “provide certainty in the flood insurance program thereby increasing consumer and business confidence in the NFIP.”
The Property Casualty Insurers Association of America (PCI) also weighed in.
Ben McKay, senior vice president of federal government relations for PCI, said the legislation will bring stability and certainty to the flood insurance program, which is “critical for helping lead a long-term economic recovery, and directly impacts the housing market.”
McKay said it was a critical time as communities across the state of Florida recover from Tropical Storm Debby. “We urge President Obama to sign this measure as soon as possible,” he said.
The transportation bill includes a provision to encourage states to strengthen their Graduated Driver Licensing (GDL) laws for teens.