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Senate passes bill delaying NFIP risk-based rates, industry reaction mixed

Senate passes bill delaying NFIP risk-based rates, industry reaction mixed

Senate passage of a bill that would delay implementation of risk-based rates for the National Flood Insurance Program for four years, yet would streamline the multistate licensing process for agents and brokers, is drawing mixed reaction from the property/casualty insurance industry and others.

The Senate passed the Homeowners Flood Insurance Affordability Act of 2014 and the National Association of Registered Agents and Brokers Reform Act of 2014 — S. 1926 — Thursday on a 67-32 vote after several days of debate.

Among other things, the bill would delay implementation of entirely risk-based NFIP rates for certain properties as called for by the Biggert-Waters Flood Insurance Reform Act. The omnibus budget bill passed earlier this month already delayed implementation of the new rates for about a year.

Both the Obama administration and the House leadership have supported implementing the risk-based rates.

However, the NARAB provision in the legislation would streamline the licensing process for brokers and agents seeking to sell insurance in multiple states, an idea that enjoys widespread industry support.

The Independent Insurance Agents & Brokers of America welcomed the approval of both the flood and NARAB provisions.

The group “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,” IIABA President and CEO Robert Rusbuldt said in a statement.

The bill will “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 nonresident insurance agent and broker licensing while preserving state insurance regulation and consumer protections” he said.

The Council of Insurance Agents & Brokers also praised the NARAB provision's approval, with council President Ken Crerar calling the Senate's move on NARAB “a tremendous bipartisan victory” in a statement.


But the flood provision drew fire from some quarters.

“PCI strongly supports a financially sound National Flood Insurance Program,” Nat Wienecke, senior vice president of the Property Casualty Insurers Association of America, said in a statement. While the group understands that the bill “is designed to address issues impacting flood insurance policyholders following the enactment of the Biggert-Waters Flood Insurance Reform Act of 2012,” the legislation does not address the “unintended consequences” of Biggert-Waters, he said.

The free market-oriented R Street Institute issued a statement expressing its disappointment at the Senate vote “gutting reforms of the National Flood Insurance Program,” but nonetheless expressed optimism that U.S. House leadership will take a more responsible approach to affordability issues.