FOR RELEASE ON RECEIPT
January 30, 2014
PCI Statement Opposing the Homeowner Flood
Insurance Affordability Act
WASHINGTON – Nat Wienecke, senior vice president, federal
government relations for Property Casualty Insurers Association of America
(PCI) issued the following statement today on S.1926 “The Homeowner Flood
Insurance Affordability Act of 2014.” The Act passed the Senate this afternoon by
a vote of 67 to 32.
“PCI strongly supports a financially sound National Flood
Insurance Program (NFIP). However, we oppose passage of S.1926. We understand
that S.1926 is designed to address issues impacting flood insurance
policyholders following the enactment of the Biggert-Waters Flood Insurance
Reform Act of 2012, yet the legislation does not address the ‘unintended
consequences’ of Biggert-Waters.”
A financially sound NFIP is critical for the 5.6 million
Americans who have come to rely on the important protection provided by flood
Earlier this year, PCI wrote each Member of the Senate
offering the technical assistance of PCI’s member companies to modify S.1926.
“These critical common sense technical amendments are necessary to address the ‘unintended
consequences’ of the Biggert-Waters and ensure that a new round of ‘unintended
consequences’ do not adversely impact housing and insurance markets throughout
the country,” continued Wienecke.
“It is also very important that policymakers realize and
acknowledge that any changes to the NFIP will take no less than six months to
be implemented once the NFIP provides the necessary guidance. S. 1926 provides
no guidance to FEMA as to how it is to be implemented and creates no mechanism
to require FEMA to allow community and stakeholder comment before finalizing
implementation and rate-setting determinations.
“PCI is disappointed that the amendment offered by Senator
Toomey was not adopted prior to the passage of S.1926,” said Wienecke. “Only
this amendment explicitly recognizes the technical and timing realities of
implementing any programmatic changes to the NFIP. In addition, the amendment would
have put properties on a ‘glide-path’ that would allow the responsible phase-in
of Biggert-Waters’ rate increases while FEMA works to complete the vital
affordability study mandated by Biggert-Waters and expressly funded by S.1926. In
addition, the amendment offered by Senator Toomey would set flood insurance
rates on a path likely to incent the gradual expansion of a private market for
flood insurance. The implementation mechanisms included in the amendment – both
technical and substantive – provide the best path forward to allow the gradual
implementation of Biggert-Waters’ combined goals of addressing long-term NFIP
solvency and flood insurance affordability.
“In addition, PCI is pleased that Senator Merkley withdrew his
amendment that unnecessarily imposes Federal involvement in the state
regulation of insurance.” The amendment would have restricted legitimate
commissions paid to certain insurance agencies by lender-placed insurers on
flood coverage. However, these commissions make up part of a lender-placed
insurer’s rates, which are subject to state insurance regulation. Thus, there
is already sufficient state-level regulation of commissions in lender-placed
transactions. “Federal intrusion into state insurance regulation is
inappropriate and unnecessary,” continued Wienecke.
“PCI applauds the passage of the National Association of
Registered Agents and Brokers (NARAB II) Reform Act of 2013, which was included
in S.1926.” Wienecke continued, “NARAB II is commonsense legislation and it
would create a streamlined agent and broker licensing system that strengthens
the competitive insurance market while maintaining important consumer
protections. It sets precedent for state-based uniform national reform as it
allows agents and brokers to more efficiently operate on a multi-state basis.”
PCI’s members include more than two-thirds of the insurers
that partner with the NFIP through the “write-your-own” (WYO) program to sell,
service, and administer this federal program.
“PCI will continue to work with the Senate and House to
offer appropriate changes that protect both consumers and the long-term fiscal
soundness of the flood insurance program,” concluded Wienecke.
PCI is composed of more
than 1,000 member companies, representing the broadest cross-section of
insurers of any national trade association. PCI members write over $195 billion
in annual premium, 39 percent of the nation’s property casualty insurance. Member
companies write 46 percent of the U.S. automobile insurance market, 32 percent
of the homeowners market, 37 percent of the commercial property and liability
market, and 41 percent of the private workers compensation market.