After seeing such broad support in the House, it seemed only amatter of time before the Flood Insurance Market Parity andModernization Act would pass the Senate and become law. ForNational Association of Professional Surplus Lines Offices (NAPSLO)officials, though, the work continues to push what they see astheir top federal legislative priority across the finish line.

The bill clarifies language in the Biggert-Waters Flood Insurance Reform Act of 2012(BW-12) regarding the ability of privately issued Flood insuranceto meet lenders’ mandatory purchase requirements. When BW-12 wasoriginally reported out of the House, it specified that lendersshall accept private Flood insurance for mandatory purchases.However, language added later in the process before BW-12 waspassed led to confusion among lenders evaluating policies for thepurpose of mandatory Flood insurance requirements.

The Flood Insurance Market Parity and Modernization Act definesprivate Flood insurance as “a policy issued by a company licensed,admitted or otherwise approved by the state.”

“All we’re doing in this legislation is clarifying that theSurplus Lines market is in fact an eligible market from which toaccept a private Flood insurance policy,” says NAPSLO ExecutiveDirector Brady Kelley.

“I say that because Surplus Lines insurers have long writtenFlood insurance policies — this isn't a new opportunity,” hecontinues. “Before BW-12 was signed, our market has always servedas a supplement to the NFIP. There are a number of homes andcommercial properties that don't fit within the terms andconditions of the NFIP policy. So we’ve oftentimes served as anexcess option, or an option when the NFIP policy doesn't do thetrick.”

Kelley adds, “From that perspective, the primary goal is topreserve the types of solutions the market was alreadyproviding.”

Back in April, the House version of the Flood Insurance MarketParity and Modernization Act, H.R. 2901, easily passed by a vote of 419–0.Keri Kish, NAPSLO's director of government relations, notes,however, that behind the apparent smooth sailing was actually a lotof hard work — work that began back in 2014 to educate legislatorsnot just on the bill, but the Surplus Lines marketplace ingeneral.

“It's not something everyone just knows about and understands,”Kish says of Surplus Lines. “Our education really helped themunderstand how the Surplus Lines market functions as part of theprivate insurance market — how we developed and why it's importantto maintain our ability to provide those options.”

With respect to the Senate's version of the bill, S.1639,discussions with legislators have a different twist than in theHouse. Kish says it is more a matter of timing than concern aboutSurplus Lines. For one, Washington has been in election mode, withsome senators in tough races. On a related note, there is limitedtime left for the 114th Congress: Senators are wrapping up a numberof initiatives, and, depending on this month's election results,there could be a lame-duck session to close out the year.

“We’ll know more after the elections,” says Kish.

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Additionally, senators know that there will be increased focuson the topic of Flood insurance next year as Congress will work ona reauthorization of the National Flood Insurance Program (NFIP).Some senators, says Kish, wonder why they should address the floodissues in the Flood Insurance Market Parity and Modernization Actwhen they are going to spend so much time on flood issues nextyear. “Can't we wait until then to address it?” Kish says, summingup the feelings of a handful of senators.

“What we are emphasizing is this is a distinct issue fromreauthorization,” she says. “This is going to help the privatemarket develop, which was the key point of BW-12. We just need thisbill to pass in order to help effectuate that plan.”

Kelley concurs: “We see this as an important first step inpromoting the private market as an alternative to the NFIP.”

He adds, “Again, our interest in the beginning was preservingwhat the Surplus Lines market was able to underwrite.” But Kelleyadds that as legislators talk about reforming the NFIP, with broadagreement that the private market should be prepared to offer moresolutions, passing S.1639 is a logical first step.

“Let's put that in place now,” says Kelley. “Let's let theindustry respond to that and start to develop new products —commercial and residential property products — as Congress furtherworks to reform the NFIP in 2017.”

NAPSLO members are optimistic about getting S.1639 passed,although, as Kish states, “We are optimistic but we’re alsorealistic.” She says work will continue as far as holding furtherdiscussions with key senators — particularly those on the SenateBanking Committee: “For members that indicate support, we’ll askthem to sponsor the legislation and to talk to their fellow membersin regard to sponsoring.”

Scott Culler, NAPSLO Legislative Committee co-chair and regionalpresident, Markel West Insurance Services, says the overallstrategy from the House to the Senate is the same: “I think it'sthe same process of making sure we educate the senators on whatwe’re trying to get accomplished — and that we’re not trying toreplace NFIP, but to supplement it.”

Lana Parks, NAPSLO Legislative Committee co-chair and presidentof managing general agency The Parks Group Inc., says “It's supportin the House Financial Services Committee, where it passed 53–0,and then passage by the full House 419–0. I think that speaksvolumes about the amount of support this measure has. This isnon-controversial.”

She adds, “I’m optimistic it will pass this year. There's noreason not to do it now. Ultimately this is giving consumerschoices. I can see no policy concerns in passing it this year.”

As for the potential impact on the marketplace, Parks sayscarriers she represents do not currently offer many flood products,but with the clarity provided by this bill, “I do see it as anopportunity — as something we should consider pursuing. If you’redoing a package [property] policy, it only makes sense to offerother perils that you can cross-sell and offer whole coverage.”

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