Here are the top eight legislative priorities that property andcasualty insurance executives, and their lobbyists, should focus onif they hope to get anything enacted on Capitol Hill this year—orfor the entire 112th Congress that ends next year.

1. SeekLong-Term NFIP Extension

A five-year extension of the National Flood Insurance Program(NFIP) would provide the industry with the certainty thatbusinesses in general believe is critical to theirdecision-making.

And a provision in the House legislation opening the door forfederal managers of the program to limit federal liability throughpurchase of reinsurance would provide ample justification forCongress to act promptly on a bipartisan bill.

Also, given that the current extension of the program runs outSept. 30—and that the Senate has so far failed to even introducelegislation dealing with the issue—it is obvious that the industryshould focus on this issue above all else.

Insurance agents are seeking to slip in language adding coveragefor business-interruption and cost-of-living expenses. Thisprovision is in the House bill and has withstood several assaultsby members concerned about the potential cost of such coverage.

Given the focus on cost-cutting that permeates Congress, it maybe wise to be careful in what you ask for. The Senate is especiallyfocused on reducing potential government liability for theprogram—and too much effort to protect this provision could becostly.

2. Prepare For A New Tax

The congressional super-committee currently crafting amultitrillion-dollar budget-cutting proposal over 10 years islikely to seriously consider closing a loophole in tax law thatallows foreign insurers to cede premiums to foreign affiliates.

This proposal divides the industry between domestic and foreigninsurers—but even foreign insurers acknowledge that a tax committeeunder pressure to reduce the deficit is going to look favorably onclosing this alleged loophole as part of a package ofrevenue-raisers.

3. Make YourselfInsignificant

Insurers are lobbying strongly to reduce to the lowest figurepossible the number of insurers that are deemed systemicallysignificant by the Financial Stability Oversight Council(FSOC).

Directly, and through members of Congress (many of whom arefacing tough re-election campaigns), the industry has forcedfederal regulators to rethink the criteria they will use indetermining whether an insurer is "SiFi" (a systemically importantfinancial institution) and therefore subject to regulation by theFederal Reserve as well as state regulators. 

This designation could also create the need for a 3 percentincrease in capital among those deemed systemicallysignificant.

4. Support Changes In Secondary-PaymentRules

Legislation introduced in the House in March would clarifyindustry reporting requirements under an existing, controversiallaw that requires reimbursement to Medicare for payments made topeople who are also paid later through workers' compensation orliability claims. 

The legislation is H.R. 1063. It may win support in Congress—ifthe industry successfully argues that the existing rules are morecostly than beneficial. 

Even though the Centers for Medicare and Medicaid Servicessupports the current regulation, the Obama administration haspromised to act to reduce regulatory burdens on businesses as ameans of spurring job creation.

5. Stay Tuned Re: TheMLR Exemption For Agents

Insurance agents are pushing for legislation that would exempthealthcare-premium commissions from the medical-loss-ratio (MLR)provision of the healthcare-reform law.

Such legislation has strong support in the House and in theSenate as well.

But, given the Senate process, strong public support for suchlegislation doesn't mean it will survive the many proceduralhurdles that Senate members can use to block action.

6. Fight The Surplus-Lines Battle InThe States

Some support exists for amending the Nonadmitted and ReinsuranceReform Act, which went into effect July 21, to give states moretime to adopt a uniform allocation formula for surpluspremiums.

But my reading of the tea leaves is that Congress is unlikely tostep in; it wants the industry to fight this battle in the states.Few congressmen want to put their limited political capital on theline by seeking to intervene in this contentious issue.

7. Accept That An Optional FederalCharter Is Doomed

While some insurers are still pushing for an optional federalcharter for insurers, there appears to be no realistic chance thatlegislation pushing this proposal will even be introduced in thisCongress.

Such legislation faces strong opposition from a considerableportion of Congress—as well as the electorate—for less, not morefederal government, and this proposal flies in the face of thatstrong opposition.

8. Relax Re: Limiting Scope Of FederalInsurance Office

Opponents of federal regulation are keeping a close eye on theactivities of the new Federal Insurance Office (FIO) to ensurethere is no so-called "mission creep" or efforts to expand itsauthority.

But, given the fact that FIO is just getting on its feet andappears to be moving aggressively to interface with the componentsof existing state governance, this may be paranoia.

FIO is currently headed by a former state regulator, MichaelMcRaith of Illinois, and just setting up the office to accomplishthe goals already supported by the clear language of thelegislation establishing it will take time.

Getting into position to advise the FSOC members on howinsurance companies operate will take time, and FIO is juststarting to staff up.