Senate Flood Bill Differs From House Version As Deadline Looms

Under the bill, all new flood-insurance policies would be priced at actuarial rates as of the date of enactment.

Another controversial provision would require FEMA to tighten its controls over the Write-Your-Own program, which has been heavily criticized by the Government Accountability Office as poorly managed.

At the same time, the bill adds a requirement for FEMA to allow customers that do not already have their premiums escrowed every month to pay their policies in installments, "providing a more affordable option for consumers purchasing insurance."

The bill is somewhat different and tougher than legislation passed by the House on July 12, says Eli Lehrer, a fellow at the Heartland Institute and an industry consultant on flood issues.

But, Lehrer adds, he still would not rule out that legislation could be hammered out by Congress for a five-year reauthorization before the current extension runs out Sept. 30.

Ben McKay, senior vice president of federal government relations at the Property Casualty Insurers Association of America, says his association supports provisions of the bill extending the NFIP for five years and is "pleased that the Senate Banking Committee is addressing the NFIP in advance of the program's September expiration."

He adds, "The bill is a step in the right direction for advancing common-sense reforms for the NFIP." 

Charles Symington, senior vice president, government affairs, for the Independent Insurance Agents and Brokers of America, says, "We are very pleased with the Senate flood-insurance legislation which extends the program for five years and makes needed reforms to the NFIP."

He continues, "We look forward to working with Chairman Tim Johnson and Ranking Member Richard Shelby in an effort to move the bill out of committee and to the Senate floor for quick consideration with the September 30 expiration of the program looming."

Surplus-Lines Uniformity, Efficiency Issues Continue After Law

The brave new world of surplus-lines reform and modernization began July 21 through the Nonadmitted and Reinsurance Reform Act, a federal law that was supposed to bring uniformity and efficiency to the industry.

The facts on the ground, however, are very different.

Under the law, the insured's home state will be the only state with jurisdiction over surplus-lines transactions and the only state that can require a tax to be paid by the broker.

Many states have still not acted to establish a system outlining how they would collect their fair share of taxes on multistate risks, and those that have are lining up in two separate camps regarding how they will share those taxes with other states.

But of greatest concern is that some states that generate the largest surplus-lines revenues are not exactly reaching out to ensure that other states get their fair share.

California and Texas have enacted laws allowing them to collect taxes, but the laws haven't created a system that will require them to share with other states.

Texas' law indicates the state may not impose a tax on nonadmitted insurance other than premiums paid for insurance in which Texas is the home state of the insured.

Given that California and Texas are the two largest states in terms of surplus-lines premiums, it appears that it will be a while, if ever, before the new law accomplishes what it is supposed to accomplish.