Senate flood insurance bill keeps current limits, omits wind coverageMortgagePress.comNational Flood Insurance Program, increasing maximum coverage limits, private wind insurance market
The U.S. Senate Banking
Committee has approved legislation to reform the National Flood
Insurance Program (NFID). The Flood Insurance Reform and
Modernization Act of 2007 will now move to the floor of the full
The U.S. House of Representatives passed a similar measure last
month, but while both the House and Senate versions reauthorize the
NFIP through 2013, the Senate version veers from the House bill by
not increasing maximum coverage limits and leaving out optional
coverages, including business interruption coverage and additional
The Senate version also differs from the House bill in that it
does not include optional federal wind coverage, something insurers
have said would result in a dramatic expansion of the NFIP--with
the potential for huge deficits--and a fundamental realignment of
both the NFIP and the private wind insurance market.
The Senate bill won praise from insurers, while agents expressed
disappointment that it lacks the increased limits and the business
interruption and living expense upgrades.
"AIA [American Insurance
Association] is pleased that the Senate Banking Committee
approved legislation that will put the NFIP on a firm financial
footing and will not include federal wind coverage as part of the
NFIP reforms voted on [recently]," said AIA President Marc Racicot.
"We have steadfastly opposed the inclusion of windstorm coverage in
the House version of this legislation and will continue to oppose
adding wind as the House and Senate deliberate on this
Adding windstorm coverage would also encourage building in
hurricane-prone regions, putting more people and property in the
path of devastating storms, Racicot said.
"This is a very good bill," said Ben McKay, Property Casualty
Insurers Association of America's (PCI) senior vice president,
federal government relations. "PCI has always supported reforming
the flood program so that it can be solvent for the foreseeable
future and helpful to consumers in need, but the addition of wind
coverage would be extremely costly and potentially very damaging to
the NFIP and its policyholders.
"We fully support the proposal to move forward with needed
reforms without including needless additional exposure to a program
that is already overburdened in the wake of hurricanes Katrina and
The Independent Insurance Agents
& Brokers of America (IIABA) expressed concern over the
missing upgrades. "Both an increase in the maximum coverage limits
and an inclusion of optional coverages would better allow both
individuals and commercial businesses to insure against the damages
that massive flooding can cause. We hope that the Senate will
consider including these provisions as the legislation moves
forward," said John Prible, IIABA assistant vice president for
federal government affairs.
The House bill would increase coverage limits from $250,000
(structure) and $100,000 (contents) to $335,000 (structure) and
$135,000 (contents) for any single-family dwelling and from
$500,000 to $670,000 for structures and related contents of a
The House version would also provide optional coverage for
additional living expenses following a flood loss when the
residence is unfit to live in, basement improvements, business
interruption for commercial property and full replacement cost of
the contents of properties. New benefits would be made available
only at time of renewal or issuance of a new contract, and only at
actuarial rates, according to the bill summary.
Agents have not supported the addition of windstorm
For more information, visit www.senate.gov or www.house.gov.