The house of representatives is likely to take up legislation that would reauthorize the National Flood Insurance Program for five years before Memorial Day, hopefully providing certainty for a program that has lived on the edge since 2008.
One hurdle was removed when the House Financial Services committee watered down to a "study" a proposed amendment mandating that NFIP customers serviced by State Farm agents be pushed back into the private sector within 27 months of enactment of the legislation.
This amendment, if it had passed the full House, could have given the Senate pause, likely reducing the possibility that the Senate would act before the current extension expires Sept. 30.
Meanwhile, at press time, an amendment supported by the insurance agents that would add business interruption to the program was delayed until May 13.
ADVISORY COMMITTEE
In other news out of Washington last week, the Treasury Department announced it is establishing an advisory committee on insurance.
In testimony May 12 before the Senate Banking Committee, Treasury Undersecretary Neal Wolin said the objective of the new advisory committee will be to present advice and recommendations to the Federal Insurance Office to assist the FIO in carrying out its job.
He says the new panel will reserve half of its membership for state insurance commissioners so that the FIO will benefit from the knowledge and regulatory experience of functional regulators.
"The remaining members will represent a diverse set of expert perspectives from the various sectors of the insurance industry (life, property and casualty, reinsurance, agents and brokers), as well as academics, consumer advocates, or experts in the issues facing underserved insurance communities and consumers," he says.
He also notes that the FIO has become a provisional member of the International Association of Insurance Supervisors (IAIS), where it will represent the United States, and it is expected to be voted-in as a full member in the fall.
The FIO is also leading the U.S. delegation for the insurance and pensions committee of the Organization for Economic Co-operation and Development, Wolin says.
Under questioning by Sen. Sherrod Brown, D-Ohio, about whether any mutual insurance companies would be regarded as systemically significant by the Financial Stability Oversight Council (FSOC), Wolin replied that "it would be premature" to comment.
At the same time, he did not touch on the elusive subject of the independent member of the FSOC. This is a priority issue for the insurance industry, and it is unclear based on Wolin's testimony when the Obama administration will deal with it.
According to Dodd-Frank, this person must be nominated by the president and confirmed by the Senate.
MED MAL
Controversial legislation establishing nationwide caps on medical-malpractice damage awards moved a step closer to House passage when the House Energy and Commerce Committee reported it to the floor. Because the legislation preempts state law, it raises constitutional issues and is likely to face rough going in the Senate.
The bill passed the committee 30-20 after a day-long markup May 11 that included votes on a number of amendments. It would cap non-economic damages in malpractice cases at $250,000 and set other restrictions on lawsuits against doctors.
A linchpin to passage is a legal opinion commissioned by the American Tort Reform Association (ATRA), a unit of the U.S. Chamber of commerce.
The opinion says the bill, H.R. 5, is consistent with the Commerce Clause, the 10th amendment, guarantees of equal protection and due process, and the right to a jury trial.
According to ATRA officials, the paper cites more than 100 years' worth of Supreme Court precedent, the consistent rejection of federal constitutional challenges to state medical-liability reforms and the opinion of the Congressional Research Service itself.
An ATRA spokesman says, "Our paper puts an end to any serious concerns or questions about the constitutionality of federal medical-liability reform."
© 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.