The most pressing insurance issue facing the new Congress is likely to be reauthorization of the National Flood Insurance Program, due to expire March 6.
The Independent Insurance Agents and Brokers of America will "advocate for both extending and reforming the program," said Charles Symington, senior vice president of government affairs. "While we would prefer a long-term extension and substantial reform, Job Number-One is ensuring that the program does not expire, leaving thousands of policyholders without flood coverage."
The American Insurance Association said the issue is complicated and requires a more comprehensive solution. Incoming President Leigh Ann Pusey said AIA will advance a proactive coastal legislative and regulatory agenda to enhance the private sector's ability to manage flood risk.
However, AIA–along with almost everyone else in the industry–believes adding wind coverage to the flood program, as proposed in the House measure, is not needed, "given there is adequate wind coverage capacity in every state through either the traditional private market or state residual markets backed by private insurers," she added.
Ms. Pusey also noted that AIA supports the development of federal programs to provide economic incentives encouraging the adoption and enforcement of better building codes and other loss mitigation efforts, and believes responsible building and land development is essential to reduce vulnerability to future hazards.
Officials of the National Association of Mutual Insurance Companies cited similar priorities on mitigation.
David Sampson, president and CEO of the Property Casualty Insurers Association of America, sees a link between debates in Washington over national catastrophe subsidies and possible regulation of insurer use of credit scores to rate homeowners coverage–a topic being studied by the Federal Trade Commission (see related story on page 8).
He said regulating use of credit scores and providing subsidies to residents for homeowners insurance in catastrophe-prone areas both involve "socialization of risk…where you have cross-subsidization of policies by geographic areas."
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