PIA National — and other insurance associations and groups —have made their stance on the issue no secret. The National Flood Insurance Program (NFIP) reauthorization needs to happen now and not later.
It expired on September 30th of last year, and here we are 10-months later and it’s still on life-support.
Jon Gentile is PIA National’s vice president of government relations. He wrote an article for National Underwriter’s website, PropertyCasualty360.com. Gentile noted the NFIP extension was tagged onto a temporary spending bill but extension expires at the end of July. The temporary spending bill it is attached to goes until the end of the fiscal year.
PIA National says that’s a bad decision.
“The thinking behind decoupling the NFIP from the regular budget process was that by doing so, Congress would force itself to deal with the program’s reauthorization sooner,” Gentile wrote.
But that — he says — didn’t happen.
“More than two months after decoupling the NFIP from the rest of the federal appropriations process, the lack of any Congressional action on reauthorization finally prompted Sen. John Kennedy (R., La.) to insert a proposal in the Senate version of the Farm Bill to reauthorize the NFIP for six months beyond its July 31 expiration date,” Gentile said.
The program lapsed four times in 2010 and 2011. During that time frame it lapsed once for over a month. This time around — in 2018 — the NFIP has lapsed briefly twice.
Gentile said, “The passage of yet another short term extension of the NFIP is preferable to allowing the program to expire going into the height of the hurricane season. During a lapse, new NFIP policies can’t be issued, requests to increase or decrease the scope of coverage can’t be processed, and renewals can’t be issued,” he said.
Gentile hopes the House goes along with the Senate and extend the NFIP for another six-months. A five-year — or more — authorization would be much more preferable to the PIA.
All this delay — Gentile added — is unneeded. “We remain frustrated by Congress’s inaction on a long term reauthorization of the flood insurance program, the House did pass a bill in late 2017, the 21st Century Flood Reform Act (H.R. 2487). This bill would provide a five-year reauthorization and includes PIA-supported reforms, such as overhauling the flood mapping process, allowing the use of more precise risk-assessment tools to determine premiums, and creating an appeals process for local governments or homeowners to challenge federal mapping decisions. Many of these items will benefit consumers and strengthen the future viability of the program,” he said.
While much of the bill is positive, PIA opposes H.R. 2487 in the long-term because it will impact insurance agents negatively. The bill has a “short-sighted provision that would very likely lead to fewer agents selling NFIP policies. The provision in question would lower something called the Write-Your-Own (WYO) reimbursement percentage by two or three points,” he wrote.
Any provisions that will lead to a cut to agent commissions is — and continues to be — a deal breaker.
“Cutting agent commissions will discourage agents from participating in the program, thereby depressing sales, and will have the unintended consequence of decreasing consumer participation in the NFIP. Any reduction in the number of policies in force will jeopardize the success of any reforms being enacted. In the aftermath of the devastation wrought by Hurricanes Harvey, Irma, and Maria last year, it is counterproductive to include a provision that undermines the NFIP’s sales force and makes it less likely that homeowners will purchase flood insurance,” Gentile noted.
Fewer policies sold leads to more NFIP debt — it’s already $25 billion in the hole — and more policies means a more fiscally sound program.
The bottom-line? “PIA calls on Congress to advance legislation that includes many of the provisions in H.R. 2487 but does not cut the WYO reimbursement rate. Most importantly, the time to act is not at the end of the current temporary extension. The time to act is now. Failure to act is not an option,” Gentile said.
Source link: PropertyCasualty360.com