As last week came to a close, two long-simmering legislative issues of great import to the insurance industry came to a head as the Senate passed financial service reform legislation and the house passed a bill that would extend the National Flood Insurance Program (NFIP) for five more years.
After a couple of years of legislative tumult, Jimi Grande, SVP of federal and political affairs for the National Association of Mutual Insurance Cos., says one way or another he’s happy to be moving on. “Washington, now and again, gets thing right,” Grande tells Insurance Networking News. “They understood that the insurance industry was not a part of the financial crisis.”
Yet, Grande admits that the understanding that main street financial institutions such as mutual insurance companies, credit unions, community banks, needed to a separate regulatory regime than systemically firms, was a long time coming. “Something that’s clearer now than before the financial crisis is that our financial market is not just big Wall Street firms,” he says. “This became evident to legislators, but it wasn’t a very natural evolution. It only became evident to them because we were screaming at the top of our lungs.”
Despite the creation of the Federal Insurance Office, the legislation largely elided issues of insurance regulation. Consequently, many issues such as an optional federal charter (OFC) for insurers may arise in the next congressional session. “There’s going a lot of talk about insurance next year,” Grande says. “It doesn’t mean there will be an OFC, but there will be a lot of hearings and discussions.”
Moreover, Grande points out that the president’s signature on the bill is not the penultimate step in the reform process. “We’re not going to know the outcome of this for awhile,” he says. “There are 10 legislative agencies impacted by this and by some estimates there be 300-500 rules promulgated. This is going to have repercussions for year.”
While the Senate ratification of regulatory reform was largely perfunctory, the passage of H.R. 5114, the Flood Insurance Reform Priorities Act of 2010, was replete with last-second drama.
To the consternation of insurers, one of three amendments offered by Rep. Gene Taylor (D. –Miss.), passed by a voice vote and was included in the final bill. The amendment would require private insurers participating in the NFIP “Write Your Own” (WYO) program to remove anti-current causation clauses from their policies. Taylor, whose home was destroyed during Hurricane Katrina and later reached a settlement with State Farm, says the clauses enable participating insurers to shift damage caused by wind to the NFIP.
To be sure, the issue of whether to include coverage for wind damage has been one of the primary issues blocking a long term funding resolution for the NFIP. With the defeat of two of his amendments, a multi-peril insurance bill sponsored by Taylor may come up on the floor as a standalone bill this week.
“It’s never over,” jokes Ben McKay, SVP, federal government relations for the Property Casualty Insurers Association of America.
Surprisingly, given the number of Republicans representing coastal districts, the vote for H.R. 5114 fell largely along party lines. “There’s a lot of extra stuff in the bill, so if you wanted to find something to love or hate, it’s in there,” McKay tells INN.
Grande says that Taylor’s efforts may be largely quixotic, noting that when a bill that included wind coverage appeared in the Senate, there was 85 votes against it. “The Senate won’t pass a bill with wind and [even if they did] the president has said he’ll veto it,” he says. “This may a bit of political gift in a tough election year for Gene Taylor—at our expense.”
Yet, in his remarks on the House floor last week, Taylor’s ardor to include wind coverage seemed genuine as he challenged his colleagues to take up the cause. "Quite honestly, I would like to see which shill for the insurance companies wants to defend what they did to individuals in the Gulf Coast and what they have done to the taxpayers as a whole," he said.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access