NU Online News Service, June 24, 2:42 p.m. EDT

As Congress works under imminent deadline to deal with the future of the critical National Flood Insurance Program, it is getting conflicting advice as to how it should move to shore up the program, with the Write-Your-Own (WYO) program getting particular attention.

At a Thursday Senate Banking Committee hearing, Sen. Tim Johnson, D-S.D., chairman of the panel and other committee members were told by insurance officials in submitted testimony that reauthorization of the program is essential.

However, several of those who testified at the hearing called for major changes, with one person saying the system is “broken,” while a consumer representative said the current framework is “unworkable.”

In opening comments, Johnson sought to reassure the industry and consumers that Congress will work to sustain the program.

He noted, “Over the past year, we have also had several disruptive lapses in the NFIP. 

“I hope we can provide greater certainty to the program through a long-term extension with much needed reforms,” Johnson said.

Adam Kolton, executive director of the National Wildlife Federation, representing SmarterSafer.org, said recent natural disasters underscore the need for NFIP reform “that leads to less development and redevelopment in high risk sensitive areas, better land use planning, and significant savings for U.S. taxpayers.

He urged the banking panel to pass a “strong, comprehensive reform bill that improves flood risk mapping, ensures risk based rates, and incentivizes mitigation by individuals and communities.”

Travis Plunkett, legislative director of the Consumer Federation of America, said the insurance component of the NFIP has “proven unworkable,” citing political pressure that has kept flood insurance rates in many areas below the real cost of providing coverage.

“This has led to chronic taxpayer subsidies now totaling $18 billion,” Plunkett said.

“Much of this subsidy has led to risky coastal development, often by affluent builders and homeowners,” he said.

He also charged that the Federal Emergency Management Agency has also failed to fix the costly WYO program.

He said this allows private insurers who assume no flood risk “to reap excessive fees for servicing flood policies, especially at times of severe flooding.”

He said that the WYO program “eats up one-third to two-thirds of the insufficient premium dollars and exposes taxpayers to unnecessary costs.”

However, officials of the Independent Insurance Agents and Brokers of America (IIABA) defended the WYO in submitted testimony, stating that independent agents serve as the sales force of the NFIP and the conduits between the NFIP, the WYO companies, and consumers.

The IIABA said that independent agents serve as the sales force of the NFIP and the conduits between the NFIP, the WYO companies, and consumers.

“This relationship provides independent agents with a unique perspective on the issues surrounding flood insurance, yet also makes the role of the insurance agent in the delivery process of flood insurance an incredibly complex endeavor,” IIABA officials said.

“Agents must possess a high degree of training and expertise and must regularly update their continuing education credits through flood conferences and seminars,” the IIABA said.

“Every agent assumes these responsibilities voluntarily and does so as part of being a professional representative of the NFIP,” the statement said.