Big ‘I’ Responds to NAIC Flood Insurance Principles

Yesterday, the Big “I” submitted comments to the National Association of Insurance Commissioners (NAIC) on its proposed “Principles for National Flood Insurance Program (NFIP) Reauthorization.”

Up for discussion at the NAIC meeting on Aug. 28, the NAIC principles are intended to serve as recommendations for Congress to consider during upcoming discussions regarding reauthorization of the NFIP, which is set to expire Sept. 30, 2017.

In the comment letter, the Big “I” expressed support for the NAIC principles, deeming them “a valuable, thoughtful and timely addition to the discussion regarding the future of flood insurance” and noting it is “critically important that state insurance regulators play a proactive and meaningful role” in reauthorizing the NFIP.

While the Big “I” largely supports the proposed principles as drafted, the association urged the NAIC to revise the document in three ways.

First, although the Big “I” supports the principle of requiring FEMA “to share NFIP claims data with insurers and modelers,” the association suggested revising the principle to recommend FEMA also make claims data publicly available. Access to this information is beneficial for insurers and modelers that are attempting to address flood risk and offers potential value to policyholders as well.

Second, while the Big “I” agrees with the NAIC principle that adoption or revision of any federally established training requirements for insurance producers who sell flood insurance should require consultation with state regulators and other relevant stakeholders, the association urged removal of the NAIC principle related to producer training because Section 207 of the Flood Insurance Reform Act of 2004 already includes the consultation requirement.

Finally, the Big “I” suggested that the NAIC expand its final principle—which suggests Congress study alternative approaches to the flood insurance program structure, such as transitioning the NFIP to a residual market or reinsurance backstop—to also include studying ways to promote development of combined property and flood insurance policies. Such a study could investigate whether federal or state-level regulations impede offering such policies.

Jennifer Webb is Big “I” federal government affairs counsel.