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Home » Changes to the Flood Insurance Affordability Act of 2013 passes US Senate
January 31, 2014

Changes to the Flood Insurance Affordability Act of 2013 passes US Senate

Flood Insurance Bill with Agent Licensing Reform Passes Senate
as reported by

The Senate passed a bill Thursday to delay certain flood insurance rate hikes and create a national registry for licensing insurance agents by a vote of 67-32. The bill delays the implementation of certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 and creates the National Association of Registered Agents and Brokers (NARAB). Known as the “Homeowner Flood Insurance Affordability Act of 2014,” it was sponsored by Sens. Bob Menendez (D-N.J.) and Johnny Isakson (R-Ga.). Its fate now rests with the House of Representatives where some Republican leaders have expressed opposition to the flood insurance delay provisions.

The House has already passed the NARAB legislation.

The Senate bill would halt premium hikes by retaining most flood insurance subsidies for four years to give the Federal Emergency Management Agency (FEMA) time to complete an affordability study and guarantee that its flood maps are accurate. The bill would also grandfather low rates for homeowners placed into a flood zone for the first time or moved into a higher-risk flood zone due to remapping.

The NARAB section promises to make it easier for agents and brokers to be licensed in states other than their own.

Earlier this week, the White House expressed budgetary and constitutional concerns with both the flood insurance delay and the NARAB proposal, although the Obama Administration did not threaten a presidential veto. While the Senate passed a number of amendments, the White House concerns were not addressed by those that passed.

The Independent Insurance Agents and Brokers of America (Big “I”), which supported both the flood insurance and NARAB measures, cheered the Senate vote.

“The Big ‘I’ is pleased that the Senate has passed this sound piece of legislation that addresses two major legislative priories for the association: flood insurance and agent licensing reform,” said Robert Rusbuldt, Big “I” president and CEO.

Rusbuldt said the bill should mitigate some of the harmful effects of Biggert-Waters “without undoing the numerous positive provisions within the law.”

The bill will also provide for streamlined non-resident insurance agent and broker licensing while preserving state insurance regulation and consumer protections, he said.

The American Bankers Association said the legislation is a key priority for many of its members.

“The strong vote from the Senate today shows the importance of addressing the unintended consequences of reforming the flood insurance program. While we remain committed to introducing actuarial rates as required under the Biggert Waters Act, today’s action by the Senate allows that process to move forward with the least disruption to homeowners and supports the worthy goal of returning the NFIP program to solvency,” ABA said in a statement.

The National Association of Professional Insurance Agents (PIA) said it supports risk-based rates that take consumer affordability into consideration but that consumers needed relief, even if it is only temporarily. “This bill provides needed relief for some policyholders by ‘kicking the can down the road’ for four years on implementing actuarially sound rates for coverage necessary to stabilize the program. At some point, Congress will have to address a long-term solution. This bill does not provide a solution, only a postponement,” said Mike Becker, PIA executive vice president and CEO.

Others warned that while the bill may protect homeowners from the “sticker shock” of rate hikes, it does not address the the National Flood Insurance Program’s (NFIP) considerable $24 billion debt and could invite further problems.

“The legislation approved today by the Senate doesn’t make flood insurance cheaper, it just makes the American taxpayer foot the bill for other peoples’ flood insurance,” said Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC).
 “It continues to hide the true risk that homeowners in flood-prone areas are facing and removes incentives for homeowners to protect their properties from flooding.”

Referring to the 2012 Biggert-Waters reforms the Senate has now voted to postpone, Grande said that they did lead to unintended consequences including some cases of extreme increases that deserve to be addressed but not in the way the Senate has voted. “Congress should absolutely help those facing true hardship, but the legislation approved by the Senate today doesn’t do that,” Grande said.   “It doesn’t address any of the actual reasons that properties are at such a high risk of flooding, and it won’t help a single homeowner to protect his or her home or belongings from a flood. Instead, it gives elected officials the ability to say they lowered flood insurance premiums during an election year.”

Nat Wienecke, senior vice president, federal government relations, the Property Casualty Insurers Association of America (PCI), said his group was disappointed by the Senate vote on flood reforms.   “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,” he said.

He warned that the Senate bill could bring a new round of “unintended consequences” unless changes are made.

PCI supports the NARAB legislation to streamline the agent and broker licensing system. “It sets precedent for state-based uniform national reform as it allows agents and brokers to more efficiently operate on a multi-state basis,” said Wienecke.


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