Senate leaders have agreed to consider a provision designed to help settle wind versus water claims in a more timely and equitable manner as part of reauthorization of the federal flood insurance program.
The provision’s sponsor, Sen. Roger Wicker, R.-Miss., said Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Sen. Richard Shelby, R-Ala., agreed to include the his amendment in a reauthorization of the National Flood Insurance Program (NFIP) when the broader measure is considered by the full Senate.
Wicker said his provision – called the COASTAL amendment, an acronym for Consumer Option for an Alternative System to Allocate Losses— would help determine wind versus water claims and provide greater certainty to homeowners and the insurance market.
‘Today’s agreement is an important step to solving the wind versus water dispute problem,’ said Wicker.
Wicker said his formula protects taxpayers and policyholders from the shifting of wind damage claims to the government’s flood program, as he says happened in Mississippi in the wake of Hurricane Katrina.
“While the COASTAL formula will be used to prevent overpayment for flood losses, I believe that the use of the FEMA formula and the NOAA data will have a second important national benefit, which is to help protect consumers from any industry abuses in the future,’ Wicker said.
The Wicker amendment utilizes data currently collected by the National Oceanic and Atmospheric Administration (NOAA), academic institutions, and private entities to allocate wind versus water damage following significant storms. Using a post-storm event formula developed under the amendment, damage would be determined by its source and attributed to wind or water peril. The formula would be applied on a property-by-property basis so individual engineering characteristics of each home would be taken into account. This would allow accurate insurance settlements when no tangible evidence remains after a hurricane.
The alternative loss allocation system would be based on the timing, location, and magnitude of wind speeds and storm surges before, during, and after a major coastal storm.
Last year, Wicker held a roundtable with Mississippi Gulf Coast residents to discuss ways to improve the NFIP. ‘There is no question that one of the most difficult obstacles in recovering from Hurricane Katrina – or preparing for the next storm – has been the cost and availability of insurance,’ said Wicker during that meeting.
Currently, the NFIP expires on Sept. 30, 2011. The Senate Banking Committee has approved a five-year reauthorization of NFIP. The Senate legislation differs in some provisions from the House-passed measure.
Was this article valuable?
Here are more articles you may enjoy.