Flood Reform Bill
Passes U.S. House
Financial Overhaul Clears Congress,
Heads to Pres. Obama’s Desk

WASHINGTON, D.C. — Insurers and agents were mixed in their views on a bill (H.R. 5114) to reform the National Flood Insurance Program (NFIP) and extend the program for five years that passed the U.S. House of Representatives last week.

Insurers, Agents Evaluate Impact of Changes to System on Industry

WASHINGTON, D.C. — The comprehensive financial services reform bill is on its way to President Barack Obama’s desk and the insurance industry is taking stock of the way the legislation will affect companies, agents and consumers.

The Independent Insurance Agents & Brokers of America applauded the House for passing the “Flood Insurance Reform Priorities Act of 2010,” which would extend the program for five years and includes much-sup-ported reforms to the NFIP.

At 2,319 pages, the bill was sponsored in the House of Representatives by Rep. Barney Frank (D-Mass.) and in the Senate by Sen. Christopher Dodd ( D-Conn.). It recently went through conference committee to hammer out changes between the two houses. It is entitled the “Wall Street Reform and Consumer Protection Act” and is aimed more at reforming practices of lenders, creditors and banks than altering the insurance industry’s regulation.

The bill is sponsored by House Financial Services Subcommittee on Housing and Community Opportunity Chairwoman Maxine Waters (D-Calif.) and House Committee on Financial Services Chairman Barney Frank (D-Mass.). The NFIP has been extended through September, but the insurance industry maintains that a longer extension is necessary.

Office to Be Created

As expected, the bill will launch a federal office of insurance (FIO), to be housed within the United States Treasury. The Office’s role will provide an expertise within the federal government to advise Congress on insurance-related matters.

According to the American Insurance Association (AIA), the FIO “will make a
substantial contribution toward broadening and deepening our nation’s under-
standing of the critical role of insurance in our financial system.”
“The recent series of expirations and
temporary extensions is negatively
impacting the market,” said Robert
Rusbuldt, IIABA president and chief
executive officer. “The Big ‘I’ com-
mends the House for passing this bill
which is a step in the right direction
to a long-term extension of the NFIP
and includes much-needed reforms to
the critical program.”
“This office was created with the intent of providing information and expertise
about the insurance industry to policymakers, and NAMIC will continue work-
ing as the FIO takes shape to ensure it remains true to that purpose,” Charles
M. Chamness, president and chief executive officer of the National Association
of Mutual Insurance Companies (NAMIC), said. “As the rulemaking process
gets underway, we will remain vigilant against any efforts to expand the role of
the FIO into a regulatory body that would needlessly duplicate the work being
done by state regulators.”
IIABA noted that the program has
worked for more than 40 years to
help protect consumers from flood
risks, and Congress has traditional-
ly extended the program for five year
periods in order to provide stability
and security for the marketplace.

Risk Assessed

“The bill passed largely recognizes that property and casualty insurers do not pose systemic risk,” said Leigh Ann Pusey, president and chief executive officer of the AIA. “This meaningful acknowledgment is a victory for the many policyholders that rely upon our low-risk business model to provide them security in times of uncertainty. The bill also takes necessary steps to prevent insurers from being lumped into many of the new “bank-focused” provisions. This, too, is a substantial recognition of the insurance business model.”

continued on page 6

“Unfortunately, recent years have
provided ample evidence of the de-
struction left behind by floods that
highlight the urgency and importance
of both extending and updating the
NFIP,” said Charles E. Symington Jr.,
IIABA senior vice president for gov-
ernment affairs. “The Big ‘I’ strongly
She added, “With some 250 new regulations to be implemented by 11 dif-
ferent federal agencies, the stage is now set for an intense rulemaking process
that will be AIA’s top priority. As was the case during the legislative pro-
cess, AIA’s focus will remain on identifying how the nature of insurance is
different than that of the banking sector and emphasizing those unique dif-
ferences with the appropriate rule making authorities. We need to remain
vigilant to ensure that the low risk nature of the property and casualty in-
dustry continues to be recognized during the implementation phase.”