Today in a historic win for independent insurance agents, the U.S. Senate acted on two of the top legislative priorities of the Big “I”—flood insurance and agent licensing reform—in one fell swoop. This afternoon, the Senate passed S. 1926, the “Homeowner Flood Insurance Affordability Act of 2013,” in a 67-32 vote. This legislation was introduced by Sens. Bob Menendez (D-N.J.) and Johnny Isakson (R-Ga.) and supported by the Big “I.”
The Menendez-Isakson bipartisan bill would make changes to Biggert-Waters in order to help with the “sticker shock” some consumers are facing regarding two provisions that create drastic premium increases. The bill would delay implementation of the bought/sold provision from Section 205 and the entirety of Section 207 until after FEMA conducts the “affordability study” as required by the law. S. 1926 would install a procedure for FEMA to issue draft regulations, with affordability in mind, before proceeding with implementing 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 flood insurance reform bill passed by the Senate also included the text of NARAB II to streamline the nonresident licensing process for agents and brokers. This legislation has been a top priority for the Big “I” for a number of years, and today marks the first time it has been passed by the Senate. The Big “I” is especially encouraged that an amendment by Sen. Tom Coburn (R-Okla.), which would have allowed states to opt out of NARAB II, was resoundingly defeated in a 24-75 vote. This amendment would have gutted the efficacy of NARAB II, and the Big “I” and its industry partners strongly opposed it.
With NARAB II included, S. 1926 now awaits consideration by the House of Representatives. In the House, similar legislation is pending: H.R. 3370, the “Homeowner Flood Insurance Affordability Act of 2013,” which has more than 180 bipartisan cosponsors. However, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has indicated he has plans to introduce competing flood insurance legislation in the near future. The Big “I” is working to ensure both that NARAB II will be included in any flood proposal brought up in the House, and that the House product provides real and meaningful relief from the premium price shock resulting from Biggert-Waters.
John Prible is Big “I” vice president of federal government affairs.