American Property Casualty Insurance Association
  • Staff Contact: Eileen Gilligan     
    • Printer-Friendly Printer-Friendly PDF Export PDF Export




Eileen Gilligan







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 insurance.

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.