Flood Insurance Bill Set for Senate Consideration

Next week, the U.S. Senate is poised to consider S. 1846, the “Homeowner Flood Insurance Affordability Act of 2013,” introduced by Sens. Bob Menendez (D-N.J.) and Johnny Isakson (R-Ga.). Last week, the Big “I” sent a letter to the Senate expressing the association’s support for the legislation.

The Menendez-Isakson bipartisan bill would make changes to the Biggert-Waters Act of 2012 (Biggert-Waters) in order to help with the “sticker shock” some consumers are facing regarding two provisions that create drastic premium increases in many parts of the country. The bill would delay implementation of the bought/sold provision from Section 205 and the entirety of Section 207 of Biggert-Waters, until after FEMA conducts the “affordability study” as required by the law. S. 1846 would install a procedure for FEMA to issue draft regulations, with affordability in mind, before proceeding with implementation of these two provisions.

The bill would potentially mitigate some of the harmful effects of Biggert-Waters, without undoing the numerous positive provisions within the law. Section 205 of Biggert-Waters phases out explicit subsidies for second/vacation homes, commercial properties, severe repetitive loss properties, properties undergoing substantial improvement and properties experiencing substantial flood damage and rebuilding. However, it immediately eliminates all subsidies, with no phase-out, for properties bought and sold. Section 207 of Biggert-Waters stops the “grandfathering” of policies located in communities with a new or redrawn map.

The Senate is scheduled to proceed with a parliamentary vote on the Menendez-Isakson legislation on Monday, and then will likely consider the legislation on the Senate floor in the middle of next week. In a big win for independent agents, the Menendez-Isakson bill will include the National Association of Registered Agents and Brokers (NARAB II) proposal that has been a top priority of the Big “I” for a number of years. The Big “I” worked with Sens. Menendez and Isakson, as well as NARAB II’s Senate sponsors Sens. Jon Tester (D-Mont.) and Mike Johanns (R-Neb.), in order to insert the NARAB II legislation into the broader flood insurance bill.

The legislation would provide for streamlined non-resident insurance agent and broker licensing while preserving state insurance regulation and consumer protections. This pragmatic bill would achieve much-needed reciprocity in producer licensing and help policyholders by permitting greater competition among agents and brokers. NARAB II would build upon regulatory experience at the state level, promote greater consistency in agent and agency licensing and ease the burden many agents face when doing business across state lines.

Should the Menendez-Isakson flood insurance legislation pass the Senate, the House will face increased pressure to remedy the risk-based pricing provisions in Biggert-Waters. While a House version of the bill has been introduced and enjoys strong bipartisan support, House Financial Services Chairman Jeb Hensarling (R-Texas) is reportedly working on a competing version of flood insurance legislation, which could be released in the next several weeks. The Big “I” is working to ensure that NARAB II will also be included in any flood proposal in the House. The association remains on the forefront of both the flood insurance and agent licensing discussions in Washington, D.C. and will continue to advocate for these necessary reforms by working with Congress.

John Prible is Big “I” vice president of federal government affairs.