The National Flood Insurance Program (NFIP) is an essential public-private partnership that protects 5.7 million consumers and 22,000 participating communities from the dangers of floods and, without further congressional action, it is scheduled to expire on May 31, 2012.
In late December 2011, the NFIP was extended yet again, providing Congress and the Obama administration with almost six months to work on and pass a long-term extension and reform. As the primary distribution channel for the NFIP, independent insurance agents play a vital role in the delivery of flood insurance, and the Big “I” strongly supports Congress’ efforts to both reform and stabilize this important program. The patchwork of short lapses and temporary extensions that has been common over the last several years has put a strain on the marketplace, the business community and homeowners.
The good news is that there are bills pending in both the U.S. Senate and House of Representatives that could solve this instability.
H.R. 1309, the Flood Insurance Modernization Act, passed in the House with strong bipartisan support last year and would extend the NFIP for five years, raise coverage limits so that they are indexed for inflation, remove subsidies for many of the properties, allow FEMA to offer optional business interruption and additional living expense coverages once certain conditions are met and increase the annual cap on premiums from 10% to 20%. These important provisions would add further financial security to the NFIP, increase the attractiveness of the program to maximize take-up rates and provide needed long-term stability for the market.
The Senate companion bill, S.1940, the Flood Insurance Reform and Modernization Act, was introduced a few months ago by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Richard Shelby (R-Ala.). Although S.1940 shares many of the same objectives and provisions as H.R. 1309, the main hurdle has been scheduling time for consideration of the bill by the full Senate due to the partisan political climate and limited legislative calendar. If passed by the Senate, most observers believe the minor differences between the House and Senate versions of the bills could be worked out relatively quickly.
The No. 1 priority of the Big “I” on flood insurance is for Congress to pass a long-term extension. Therefore, should Congress be unable to come to an agreement on the reauthorization and reform bills mentioned above, the Big “I” will strongly advocate for a clean multiyear extension of the NFIP. Such a simple extension would provide needed stability to the program and its consumers while allowing Congress additional time to work on the essential reforms currently being debated.
Margarita Tapia (email@example.com) is Big “I” director of public affairs.
MLR Agent Relief Legislation Introduced in U.S. Senate
In early February, Sens. Mary Landrieu (D-La.) and Johnny Isakson (R-Ga.) introduced a highly-anticipated bill that would provide agent relief from the medical loss ratio (MLR) calculation as implemented under the Patient Protection and Affordable Care Act (PPACA).
The bill, S. 2068, the Access to Professional Health Insurance Advisors Act of 2012, also has the support of Sens. Ben Nelson (D-Neb.) and Lisa Murkowski (R-Alaska), who signed on as original cosponsors, and the list of senators in favor of the legislation is expected to grow.
S. 2068 is intended to be the Senate version of H.R. 1206, the Access to Professional Health Insurance Advisors Act of 2011, introduced in the House by Reps. Mike Rogers (R-Mich.) and John Barrow (D-Ga.). At press time, H.R. 1206 had nearly 190 bipartisan co-sponsors.
As with H.R. 1206, the Senate legislation would exclude agent compensation from the MLR calculation. However, the Landrieu-Isakson bill differs from H.R. 1206 in that this exclusion would only apply in the individual and small group markets. Also, any bonuses received by an agent would remain in the administrative cost category. In addition, unlike H.R. 1206, S. 2068 makes no changes to the MLR adjustment process for states.
The adjustment process is the procedure by which states can apply to the U.S. Department of Health and Human Services for reductions in their MLR ratios, if they can prove that the implementation of the regulations will cause a disruption in the private insurance markets. PPACA specifies that these adjustments expire in 2014 and only apply to the individual market. H.R. 1206 would expand these adjustments so they would also apply to the small group market. S. 2068 does not contain expansion language.
Industry stakeholders, including the Big “I,” feel that these adjustments are somewhat helpful but only on the margins due to their limited nature both in duration and scope. Additionally, HHS has approved very few states for reductions in their MLR ratios, and only for relatively small amounts.
While both of these bills have bipartisan support, any effort to amend or repeal key portions of PPACA faces an uphill climb due to presidential election year politics. However, momentum for the legislation in both chambers continues to build. Increased support for the bills in Congress will focus attention on the issue and apply additional pressure on the administration to consider legislation to solve this problem.
The Big “I” government affairs team will continue working to gain co-sponsors for both the House and Senate MLR bills.