NU Online News Service, July 15, 4:10 p.m.EDT

The House today passed legislation that would provide certaintyto the National Flood Insurance Program, but an amendment drewcondemnation from insurer groups, leading one to withdraw supportfor the bill.

The legislation, H.R. 5114, the "Flood Insurance Reform andPriorities Act of 2010," sponsored by Rep. Maxine Waters, D-Calif.,passed the House 329-90. It reauthorizes the NFIP for five yearsand includes provisions designed to phase in market rates andreduce instances where a homeowner submits multiple claims.

The insurance industry's major concern involved the House'sapproval of an amendment from Rep. Gene Taylor, D-Miss., thatrequires Write Your Own (WYO) insurers to agree that they will notuse "anti-concurrent causation" language to exclude coverage ofwind damage simply because there is also flood damage to theproperty.

The amendment led the American Insurance Association (AIA) tosay it now opposes the bill. The association also cautioned that itis uncertain that the Senate will even consider any NFIPreauthorization bill this year.

Leigh Ann Pusey, AIA president and CEO, said, "Adopting theTaylor amendment would force WYO companies to take a hard look atwhether they want to continue participating in the program andcould actually result in a reduction in NFIP payouts topolicyholders even when they are warranted."

The Property Casualty Insurers Association of America (PCI) saidthe amendment would require a WYO company to rewrite theirinsurance contracts to address the concurrent causation issue,"putting those companies at an increased risk of loss."

PCI added, "This would create a competitive disadvantage forthose WYO companies who support the NFIP, and threatens to forceprivate insurers out of the WYO market."

Jimi Grande, senior vice president of federal and politicalaffairs for the National Association of Mutual Insurance Companies,said, "It's extremely disappointing to see, once again, meaningful,needed reform legislation undermined. The original bill containedreforms with broad, bipartisan support that would have started theNFIP on the road back to financial stability.

"Rather than attracting new companies to the NFIP, thisamendment will make it more difficult for insurers to write floodcoverage and discourage them from participating in theprogram."

The bill reforms the NFIP by phasing in market rates and phasesin actuarial rates for severe repetitive loss properties and thosewith substantial damage.

An amendment to add wind coverage to the program was defeated inthe House.

The bill is silent on dealing with the current NFIP deficit ofmore than $18 billion.

The bill attempts to end criticism of prior reform efforts thatmandated increases in rates based on new mapping. The bill providespremium discounts for five years to assist consumers in newlydesignated flood hazard areas who are now subject to a newrequirement to purchase flood insurance.

The bill also phases in rates for properties that were notpreviously in the flood plain, and phases out subsidies forproperties built prior to 1974.

It increases the coverage limits available for residential andcommercial properties, which have not changed since 1994, andincludes a provision added at the request of the IndependentInsurance Agents and Brokers of America that provides an option topurchase business interruption coverage for an appropriatepremium.

It also increases the minimum deductible that more accuratelyreflects private market deductibles, and allows for premiums to bepaid in installments for lower-income property owners.