NU Online News Service, Sept. 7, 2:31 p.m.EDT

A senator plans to revive the sensitive “wind-vs.-water” issueby introducing an amendment to the Senate bill reauthorizing theNational Flood Insurance Program (NFIP) when it is marked upThursday.

An aide to Sen. Roger Wicker, R-Miss., confirmed today his plansto offer the amendment that would split the difference.

The aide says the amendment is justified, stating that thesenator notes that currently, insurance adjustors, usually employedby private wind insurers, were responsible for determinations ofwind-vs.-water damage.

“This potential conflict of interest was cited by the GovernmentAccountability Office in its reports following Hurricane Katrina,”Wicker says.

He adds, “My amendment would use scientific data to settle totalloss properties after a hurricane.”

The amendment would create a “standardized loss-allocation”system to distribute losses between the NFIP and private orresidual-market wind insurers following the total loss of anyproperty that carries both flood and wind insurance.

The Wicker amendment would utilize data currently collected bythe National Oceanic and Atmospheric Administration, academicinstitutions and private entities to allocate wind-vs.-waterdamages following significant storms.

Using a post-storm event formula developed under the amendment,damage would be determined by its source and attributed to wind orwater peril, Wicker says.

The formula would be applied on a property-by-propertybasis so individual engineering characteristics of each home wouldbe taken into account, he notes.

“This would allow accurate insurance settlements when notangible evidence remains after a hurricane,” Wicker says.

The provision is not included in the House legislation, theFlood Insurance Reform Act of 2011, H.R. 1309, and, if included inthe Senate bill, could complicate efforts to reconcile the twomeasures before the Sept. 30 deadline.

Eli Lehrer, the Heartland Institute's vice president forWashington, D.C. operations, says, “The fundamental idea in thisbill solves one of the major quandaries facing the nation's currentcoastal insurance system. The current haphazard system forallocating claims between NFIP and wind insurers often leaveseveryone involved worse off. This bill holds out the possibility ofdeveloping a fair, equitable system that serves everyone'sinterest.

“It's not perfect, but given that the system proposed isoptional and will not require a meaningful commitment of taxdollars, it certainly seems like a worthwhile experiment.”

Others within the industry fear that such a program would causemore confusion for insurers and consumers in the aftermath of amajor flood.

Earlier this year, Wicker proposed an identical plan as a standalonebill, the Consumer Option for an Alternative System To AllocateLosses Act of 2011, or COASTAL Act, S. 1091. According to thatbill's summary and status, it was read twice and referred to theCommittee on Banking, Housing, and Urban Affairs on May 26.