AIA Puts Coastal Insurance Needs High On Legislative Agenda

WASHINGTON--The American Insurance Association said it will lobby Congress over legislation concerning affordable property insurance, an optional federal charter for insurers and comprehensive flood insurance reform.

Mark Racicot, AIA's president, said that "2008 is shaping up to be another active year for the property-casualty industry."

Mr. Racicot said one topic "likely to receive substantial attention from lawmakers is property insurance, especially for those homeowners living in coastal areas that have been impacted by recent hurricanes."

In making that comment, Mr. Racicot was reiterating what Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, and Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said in separate press briefings last week.

"This is an issue of particular importance for our association," Mr. Racicot said. He said the AIA is committed to finding a workable solution for insuring our country against losses from natural catastrophes but will not support some of the legislative proposals now being discussed, including creation of federal catastrophe funds.

"While these mechanisms may be attractive, they also promote unwise and unsafe property development and leave problematic cost-drivers for insurers and policyholders unresolved," Mr. Racicot said.

He said Congress should not create additional mechanisms "that would interfere with the private market's ability to protect homeowners and businesses."

Regarding the OFC, he said the AIA and other supporters "will continue to build on the momentum generated with the introduction in 2007 of bi-partisan bills in both the House and the Senate."

He said that creating an OFC "would provide consumers all the benefits of an efficient, modern regulatory structure through increased competition and allow the U.S. insurance industry to compete more equitably on a global basis."

On the issue of reauthorizing the National Flood Insurance Program, he said the AIA is a "strong proponent" of comprehensive flood insurance reform and will urge Congress to complete action on a NFIP reauthorization bill this year.

But, he said the AIA "will steadfastly oppose" any inclusion of windstorm coverage to the NFIP, as included in H.R. 3355, legislation passed by the House Nov. 8.

"Doing so would break the NFIP's already burdened financial system and would encourage building in hurricane-prone regions, putting more people and property in the path of devastating storms," Mr. Racicot concluded.