I am pleased to note the introduction on June 25, 2015, of
bipartisan legislation in both the U.S. House and U.S. Senate which would help
facilitate flood insurance coverage options beyond the National Flood Insurance
Program (NFIP).
The Flood Insurance Market Parity and Modernization Act, as
the legislation is called, has been put forward in each chamber.
Representatives Dennis Ross (R-Fla.) and Patrick Murphy (D-Fla.) introduced the
bill as H.R. 2901 in the House, and Senators Dean Heller (R-Nevada) and Jon
Tester (D-Mont.) introduced it as S. 1679 in the Senate.
The proposed legislation is of crucial importance in
allowing consumers viable options for flood coverage other than the debt-ridden
NFIP, currently estimated to be underwater
by $24 billion. According to an article by Andrew G. Simpson in Insurance Journal, outgoing FEMA
deputy associate administrator Brad Kieserman testified June 2, 2015, before
the U.S. House Financial Services Committee that the NFIP was a “melting
iceberg” whose shortcomings were amplified by claims issues following Hurricane
Sandy.
We expect the surplus lines market to play a crucial role in
supplying private flood insurance to consumers. Given the high-capacity nature
of flood risks, it seems unlikely that the admitted market would have the
ability to insure these kinds of hazards.
A few months ago, we at the SLA learned that there were
efforts to include language in the bill that would have prohibited the placing
of the risks with the surplus lines market. I went to Washington, D.C., and met
with key members of the committees of jurisdiction—the House Financial Services
Committee and the Senate Banking Committee—to explain why the admitted market
was unlikely to take on a significant portion of the flood risk and that,
consequently, allowing surplus lines coverage would be crucial to any
privatization effort. I also wrote every member of those two committees and
sent them the SLA’s Legislator/Regulator packet that explains who we are, what
we do, and why we are necessary for insurance consumers.
I applaud members of Congress from both parties who saw the
wisdom of allowing a role for surplus lines in this bill, which I am pleased to
report that this new legislation does. Our efforts toward achieving that result
are the kind of work that your association needs to do to ensure that your
role, as a crucial link in the insurance marketplace, is protected. We will
continue to seek out opportunities to inform legislators and regulators about
the surplus lines industry and its very necessary role in ensuring that
consumers can get the coverage they need.
