A House panel has reported out flood insurance legislation and two other bills dealing with natural catastrophes, but only the flood program extension has unanimous industry backing.
Last Tuesday, the House Financial Services Committee cleared the Flood Insurance Reform Priorities Act of 2010, H.R. 5114, for a floor vote. No date has been set for House floor action.
Besides extending the National Flood Insurance Program for five years, H.R. 5114 includes limited changes for the program, such as increasing the maximum coverage limits for flood insurance policies.
The Independent Insurance Agents and Brokers of America also won an amendment in the bill that would add business interruption coverage and additional living expense reimbursement as an option to those participating in the program.
The panel also moved the Homeowners Defense Act of 2009, H.R. 2555, to the floor by a 39-26 vote. This legislation, sponsored by Rep. Ron Klein, D-Fla., would create a program providing a federal backstop behind insurer-funded state catastrophe funds and federal loans if state funds are exhausted following a major event.
Unlike the flood bill, which has the industry united in support of the measure, the industry is divided on H.R. 2555, which critics label as a "Beach House Bailout."
A third bill, the Multiple Peril Insurance Act of 2009, has drawn unanimous industry opposition. The legislation sponsored by Rep. Gene Taylor, D-Miss., would add wind damage coverage to the NFIP program. It passed by a 40-25 vote.
Rep. Taylor, who sued his insurer over a personal claim resulting from Hurricane Katrina in 2005, testified at a hearing held last week that there are "simple reasons" wind should be added to the program.
"Homeowners and business owners in coastal communities need to be able to buy hurricane insurance that will cover hurricane damage without needing to hire lawyers and engineers to engage in prolonged disputes over what portion of the damage was caused by flooding and what portion was caused by wind," he said.
"As long as wind and flood coverage are in separate policies, there will be gaps in coverage and disputes over causation after hurricanes," he added.
Kathy Mitchell, a federal affairs director at the National Association of Mutual Insurance Companies, noted that the panel previously had combined the multiperil bill with NFIP reauthorization legislation. "By keeping the two separate," Congress can pass the needed NFIP reforms "without adding a massive new exposure that could sink the entire program while undermining the private market," she said. (See related text box for more industry reaction to the bills.)
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.