Insurance-industry officials this weekend voiced strong support for the Obama administration’s request to raise the National Flood Insurance Program’s borrowing authority by 50 percent.
One industry official said it was “imperative” that Congress act promptly to increase the borrowing authority to $30.4 billion.
Another, saying that the request is a product of prior losses and poor pricing for flood insurance, urged that Congress include in the legislation incentives for states in flood-prone areas to impose uniform and strengthened building codes.
A third industry official says he is not surprised at the size of the request because “Sandy continues to be mostly a flooding event,” but he wondered about the chances of the request passing through Congress. “With everyone focused on the fiscal cliff, the request will be a heavy lift for the industry,” the official said. “However, in the end, I imagine it will get done.”
Charles Symington, senior vice president, government affairs and federal relations for the Independent Insurance Agents and Brokers of America, says the IIABA is pleased that President Obama included a request in the NFIP borrowing authority in his recent Sandy emergency aid package.
Agents sell flood policies as representatives of Write-Your-Own companies, and also handle flood claims.
Symington says that, by all accounts, the NFIP will hit the current borrowing authority limit before paying all the claims resulting from Sandy, and an increase is necessary to ensure that consumers are fairly compensated for flood losses due to this historic storm.
“We thank the president for this move,” Symington says.
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, says, “Clearly the NFIP has an obligation to pay claims to its policyholders, so they will need the borrowing authority they're requesting.”
Grande adds, “As unfortunate as the shortfall is, it is more a vestige of the program's long-held flaws. The reforms passed this year phase in correcting measures that should reduce the need for future borrowing.”
Still, Grande says, policymakers should not ignore the lessons to be learned from Sandy and all other natural disasters. “We're not defenseless from the weather, and the government should be proactive in passing incentives to build stronger structures. Modern building codes have proven to reduce property damage, save lives and result in lower need for disaster relief.
“As Congress and the Obama administration decide on the appropriate level of assistance, we will urge them to include the Safe Building Code Incentive Act in their final aid package,” Grande states.
Tom Santos, Vice President of federal affairs for the American Insurance Association, says Sandy made it clear once again that the NFIP is in need of significant reform. “Fortunately, the bill enacted this past summer goes a long way to making the changes necessary to ensure that the program will be able to meet the future needs of flood victims,” Santos says.