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There looks to be a limited risk management-related agenda at the congressional level this year.
That's not because of the relative merits of issues such as reauthorization of the National Flood Insurance Program or dealing with international insurance regulatory initiatives. Rather, it's the political reality of national elections and a short legislative calendar.
“We have to be realistic about a presidential election year, particularly one like this one with divided Congress and administration,” said Joel Wood, senior vice president of the Council of Insurance Agents and Brokers in Washington. “I do not believe there will be a vast agenda.”
But for Mr. Wood and others, there still could be significant actions on both the legislative and regulatory fronts. Observers expect a congressional discussion about international insurance regulatory efforts, and perhaps some movement on allowing certain risk retention groups to offer property coverage.
Perhaps the biggest risk management-related issue will be laying the groundwork for the reauthorization of the NFIP, which is slated to expire Sept. 30, 2017.
There will be “a lot of motion and maybe some action” on NFIP reauthorization, said Nat Wienecke, senior vice president in the Property Casualty Insurers Association of America's Washington office. The program will be the subject of a series of hearings in 2016.
There will be “basically a yearlong conversation,” he said. “I don't expect legislation to be introduced.
“We're already seeing preparation by all the major stakeholders in NFIP,” said Mr. Wood. “Barring any major flood event, we still are going to see a very significant battle on this.”
He said House Financial Services Committee Chairman Jeb Hensarling, R-Texas, and Senate Banking, Housing and Urban Affairs Committee Chairman Richard Shelby, R-Ala., “will light themselves on fire before they lift the borrowing limits in the absence of significant actuarially sound reform” of the program.
Related to the NFIP is legislation that would promote predisaster mitigation efforts rather than post-catastrophe relief.
“We've been calling on Congress to create a national mitigation investment strategy. I think we'll see a package introduced that is a good first step” in dedicating more resources to be spent predisaster, said Jimi Grande, senior vice president of the National Association of Mutual Insurance Cos. Washington office.
Mr. Wood said allowing RRGs to write property coverage “may go somewhere.”
But Charles Symington, senior vice president of the Alexandria, Virginia-based Independent Insurance Agents & Brokers of America, said his group opposes such a move for RRGs, which now are limited to liability coverage.
“There's no marketplace crisis, and we think it's bad public policy in light of the very light regulation RRGs have compared to traditional insurers,” he said.
The New York-based Risk & Insurance Management Society Inc. wishes to block another legislative effort. That's an attempt disallow the deduction for excess nontaxed reinsurance premiums paid to affiliates. Rep. Richard Neal, D-Mass., has introduced legislation in the past to make the change, which is backed by the Obama administration.
“The legislation has come and gone over the years, and we continue to be opposed to it,” said Janice Ochenkowski, a former RIMS president and now chair of the risk management group's external affairs committee. “We're concerned it might gain some traction in this shortened year.”
Several observers believe Congress may address the issue of international insurance regulation during this shortened legislative year.
“We're seeing very strong signs of congressional actions to rebalance some of the international and domestic actions on insurance regulations,” said Dave Snyder, a PCI vice president. His colleague, Mr. Wienecke, said concerns about international standards being imposed on U.S. insurers are “as bipartisan as they can be.”
On the regulatory side, “the work by the Federal Reserve on domestic group capital standards has to get done,” said Leigh Ann Pusey, president and CEO of the American Insurance Association in Washington.
“There is an expectation that the Fed will begin a process and put out a rule for comment,” she said. “It needs to get done before any global insurance capital standard is finalized.”
Also of concern to agents and brokers on the regulatory side is implementation of the National Association of Registered Agents & Brokers, which is to streamline licensing procedures for nonresident agents, said Mr. Symington. President Barack Obama has yet to nominate members to the board.
“We're hopeful that early next year we'll have some names put forth for Senate consideration so they can start the real work, a lot of foundational work. First and foremost, we have to get the right people on that board,” Mr. Symington said.
It may be a new year, but Congress shouldn't waste time in tackling an old subject — extending the National Flood Insurance Program. While the NFIP doesn't expire until September 2017, reauthorization of the debt-plagued program has proved to be extremely contentious in recent years.