Insurer Group To Fight Expected Wind Amendment To Flood Bill

Mr. McKay noted that Rep. Taylor represents a region that has undergone a lot of devastation going back to Hurricane Katrina in 2005.

But Mr. McKay called the idea to add wind coverage to the flood program a "bad public policy decision."

He said adding wind coverage could dislocate thousands of private sector jobs, pushing them to the public sector. He said the amendment would also impact the amount of premium taxes states get, "so it's going to hit states' bottom lines, and we all know that states at this point need every dollar they can get."

While Mr. McKay said it is unknown where the House currently stands on adding wind coverage, he said other representatives will likely be sympathetic to Rep. Taylor's position and view him as a leader on the issue. He is from a catastrophe-prone region, Mr. McKay said, and he is also a leader of the Blue Dog coalition of Democrats.

Many members of the House are not experts on the flood program, Mr. McKay said, and they will likely give Rep. Taylor "a lot of deference" on the issue.

"So it becomes incumbent on us to go in and educate hundreds of members as to why [adding wind coverage] sounds good, but why it's ultimately not good," Mr. McKay said. "And that's no small task for us."

Another expected Rep. Taylor amendment would require Write Your Own insurers to agree that they will not use "Anti-Concurrent Causation" language to exclude coverage of wind damage simply because there is also flood damage to the property.

The amendment also implements a recommendation by the Government Accountability Office to require insurers to submit to NFIP their procedures and instructions for dividing the flood loss from the wind loss on the same property and requiring that they include all evidence, photos, eyewitness statements, etc. from both claims in the NFIP claim file.

And an additional amendment would reduce the expense allowance paid to Write Your Own insurance companies by 1 percent of premiums and require the savings to be retained to reduce the NFIP debt.

Ted Besesparis, a spokesman for the National Association of Professional Insurance Agents, said the federal government should not penalize its private sector partners for the purpose of making payments on a federal government debt that they had nothing to do with incurring.

"The debt of the NFIP was the result of federal insurance policy claims payments to cover the insured losses of the extraordinary hurricane events of 2005, which were the federal government's obligation to NFIP policyholders," he said.

Private sector insurance carriers participating as WYOs and their non-flood policyholders should not be expected to pay a recoupment fee going forward for the NFIP, Mr. Besesparis said.

Matt Brady, a spokesman for the National Association of Mutual Insurance Companies, said that, "Rather than address the problems that arose in the wake of the 2005 hurricanes, these amendments would simply punish consumers by increasing costs of the NFIP."

He said that, "Adding bureaucratic hurdles and reducing the expense allowance for insurers will only serve to drive companies out of the Write Your Own program at a time when increasing competition should be a priority."

The bill to be discussed Thursday currently has no amendments attached, but Mr. McKay said that is expected to change. "Obviously as a train that is leaving the station, there are a lot of cars that want to hitch on," he said.

Mr. McKay said PCI is supporting the bill, and likes many of the provisions. But he said PCI would have liked to have seen a provision forgiving the program's $18 billion in debt.

There is currently no companion bill in the Senate.

The flood program has lapsed four times since the original reauthorization expired in September 2008. The current temporary reauthorization expires on Sept. 30, 2010.