With Congress only having a few weeks to finish up a ton of business before adjourning for the fall election season–and perhaps until 2009–what are the chances that any significant action will be taken on a host of insurance-related bills before Washington becomes a ghost town? Read on for my handicapping.
Playing odds maker, the following are the major bills on tap, and what I think of their chances for passage. Feel free to weigh in with your own assessments.
The Flood Insurance Reform and Modernization Act, which passed the House and Senate, but in quite different versions, with the House inclusion of wind coverage the biggest sticking point.
THE SKINNY: Congress can’t leave without somehow extending flood coverage, and the program is set to expire Sept. 30. But once again, don’t expect the Senate to budge to accommodate the House, with its far more expansive version. Congress still is smarting from the bath Uncle Sam is taking on Katrina flood claims, due to inadequate flood insurance rates. No way the Senate will allow wind coverage to be added…unless another monster hurricane hits in the next two weeks, in which case, all bets are off.
ODDS: Without Wind Cover: Even Money; With wind coverage, 100-1; If a monster hurricane hits in the next two weeks, 3-1
The Homeowners Defense Act, which would allow states to pool catastrophic risks, then transfer them to the private market via cat bonds or the purchase of reinsurance, with the pool backed by the federal government.
THE SKINNY: This bill passed the House by a 258-155 margin last November, but has stalled in the Senate. Congress has no stomach for taking such a huge step into the cat market at this point. If the Democrats take the White House, you can bet on some version of this passing next year, but for now it’s dead on arrival…unless a devastating monster hurricane hits Florida or the Gulf states while Congress is still in session. Then all bets are off.
ODDS: With a hurricane, 2-1; With calm winds, 500-1
The Insurance Information Act, creating an Office of Insurance Information within the Treasury Department.
THE SKINNY: Seems like a no-brainer, right? This bill would help coordinate federal treatment of insurance, especially on international trade matters. However, it’s not a slam dunk, because it would require a new set of government bureaucrats to administer such an office.
The Nonadmitted and Reinsurance Reform Act, setting federal standards for oversight of surplus lines and reinsurance.
The surplus lines part has widespread support; not so for the reinsurance section. Still, the concept makes a lot of sense, even to state regulators wary of losing their authority. However, there is an awful lot on the congressional plate. Will there be time to beat the clock on this bill?
The National Association of Registered Agents and Brokers Reform Act, which would establish a nonprofit corporation to handle multistate producer licensing.
THE SKINNY: State regulators are on board in theory, but fear how this would play out. I have a feeling there just isn’t enough time to clear whatever hurdles remain on such an esoteric topic for most members of Congress.
ODDS: In the House, 5-1; In the Senate, 10-1
The Increasing Insurance Coverage Options for Consumers Act, which would allow risk retention groups to provide property as well as liability insurance.
THE SKINNY: Another no-brainer. With property coverage hard to come by in disaster-prone areas, why wouldn’t Congress rubber stamp an expansion of the National Liability Risk Retention Act? But again, this is a very esoteric topic, and Congress probably doesn’t have the time to get to it.
The National Insurance Act, which would establish an optional federal charter.
THE SKINNY: With the split within the insurance and regulatory communities, there is simply not enough time to convince Congress to take such a radical step, at least not this year.
Well, what do you folks think?