NU Online News Service, Sept. 9, 3:15 p.m.EDT

The Thursday decision of the Senate Banking Committee tosupport the idea of splitting the difference onthe wind-v-water issue is setting off a fierce, albeitbehind-the-scenes, lobbying campaign within the insuranceindustry.

The bill is the Consumer Option for an Alternative System ToAllocate Losses Act of 2011, or COASTAL Act, S. 1091, introduced bySen. Roger Wicker, R-Miss.

Thursday, Sen. Tim Johnson, D-S.C., chairman of the committee,and Sen. Richard Shelby, R-Ala., ranking member, announced theirsupport for the bill.

Wicker says in a statement that Johnson and Shelby have agreedto include the COASTAL Act legislation reauthorizing the NationalFlood Insurance Program (NFIP), which passed through the committeeyesterday.

Including the provision could be done by adding it to the billconsidered by the full Senate, or as part of a manager's amendmentto the bill offered by Johnson and Shelby, implying bipartisansupport.

Wicker says his bill would help determine wind-versus-waterclaims and provide greater certainty to homeowners and theinsurance market, "ensuring certain losses from future storms aresettled in a timely and equitable manner."

It would divvy up losses after a major coastal storm betweenwind insurers and the NFIP through an alternative loss-allocationsystem that would be based on the timing, location, and magnitudeof wind speeds and storm surges before, during, and after thestorm.

But the industry appears split on the issue.

Jimi Grande, senior vice president of federal and politicalaffairs for the National Association of Mutual Insurance Companies,says "Terms like 'inappropriate' and 'abuse' [in industry handlingof claims from Hurricanes Katrina and Rita in 2005] are a littlehyperbolic."

Grande says that almost 98 percent of claims resulting from the2005 storm season were resolved with no dispute at all.

"We share the senator's goal of a swift and fairclaims-resolution system, but worry that his bill may offer morecomplications than solutions," Grande says.

"We're also concerned about the precedent it sets usurpingcontract law and state-regulatory authority, even in its limitedscope," Grande said.

For these reasons, "we would prefer to see Congress conduct athorough study of this proposal by way of a study by the GovernmentAccountability Office," Grande says.

On the other side, Joel Kopperud, a director of federal affairsfor the Council of Insurance Agents and Brokers, said the Councilsupports the Wicker amendment.

"We should focus on efficiency and taking the customer out ofthe whipsaw between flood-program and wind-carrier coverage whenthey were properly and fully insured," Kopperud says. "That is thepromise of the Wicker proposal."

An industry official in Washington would not comment on therecord, but adds, "I've heard this '98 percent of all claims wereeasily taken care of' line too many times. How much more evidencedoes anyone need to present than the thousands of pages ofdocumentation from State-Farm engineers about how to categorizeevery claim as flood?" the official says.