PCI Makes NFIP Renewal a Priority for 2008 |
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Written by U.S. Insurance News
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Sunday, 20 January 2008 |
The Property Casualty Insurers Association of America (PCI) has set its priorities for 2008, and it has targeted renewal of the National Flood Insurance Program (NFIP) as a top legislative priority.
The NFIP is set to expire on Sept. 30. The House passed a renewal bill, H.R. 3121, on Sept. 27 of last year, but PCI opposes this bill because it contains a provision that would add wind coverage to the program. However, PCI supports the Senate bill, S. 2284, which would not add wind coverage to the NFIP. This bill, which would provide mitigation grants, address repetitive-loss properties, and create additional federal funding for updated flood maps, passed the Senate Banking Committee on Oct. 17 but is currently under a hold by Sen. David Vitter (R-La.).
PCI takes the view that, while the inclusion of wind coverage within the NFIP is well intentioned, it may produce unintended negative consequences for millions of American insurance consumers.
"Our concern is that the addition of wind coverage will create artificial subsidies, essentially causing rate hikes for consumers in non-coastal parts of the country who do not face the same wind-damage risks as coastal policyholders," said David A. Sampson, president and CEO of PCI. "It is unnecessary for Congress to expand the flood program, because wind coverage is already available either through the private sector or state wind insurance programs. It would be redundant to have a government program competing with coverage that already exists."
In addition to pursuing passage of the NFIP, the association says it will work to pass surplus lines and building codes legislation and closely monitor work on a variety of other natural catastrophe bills.
Additionally, PCI will stay involved in ongoing discussions of the terrorism insurance issue. With passage of the extension of the Terrorism Risk Insurance Act (TRIA), a number of government studies will follow, such as those on the availability and affordability of terrorism insurance; insurance market capacity for coverage of attacks by nuclear, biological, chemical, and radiological (NBCR) weapons of mass destruction; and a "reset" provision creating lower deductibles for areas previously attacked by terrorists.
Rep. Gary Ackerman (D-N.Y.) has promised to pursue a broader TRIA bill in 2008. PCI will support most of the reforms it is believed that he will propose, but will block any attempt to add a "make-available" provision for NBCR coverage to the program.
"While we won a great victory in 2007 when Congress passed a long-term TRIA extension, our work on this important issue is not finished," Sampson said. "In particular, the issue of an NBCR mandate has not disappeared, and we must continue to make our case that attacks by weapons of mass destruction are uninsurable."
Sampson added that members of his association think that it would be a risky burden both for insurers-particularly small- to mid-sized companies-and policyholders to expand the program and require companies to offer NBCR coverage to their policyholders.
PCI said that in addition to these issues, it will keep its attention in 2008 on:
- Senate passage of the Nonadmitted and Reinsurance Reform Act (H.R.1065/S. 929), which passed the House on June 25. This legislation would streamline a critical component of the surplus lines insurance market, particularly in regard to placement, tax payment, and the allocation of premium for multistate surplus lines risks.
- Support of H.R. 3926, the Safe Building Code Incentive Act, and H.R. 4461, the Community Building Code Administration Grant Act.
- S. 2286/H.R. 3644, the Commission on Natural Catastrophe Risk Management and Insurance Act.
- S. 2310/H.R. 3355, the Homeowners' Defense Act.
- S. 2327, the Homeowners' Insurance Assistance Act.
- S. 2328, the Property Mitigation Assistance Act.
- H.R. 164, the Policyholder Disaster Protection Act.
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