Last week, 23 members of the U.S. House of Representatives sent a letter to FEMA requesting an increase in oversight of private insurers that participate in the NFIP). Led by Reps. Frank Pallone (D-New Jersey) and Maxine Waters (D-California), the letter comes at a time when insurers participating in the NFIP are under increased scrutiny for their handling of Superstorm Sandy claims.

In an effort to strengthen the NFIP and provide fiscal soundness to the program, Congress passed Biggert-Waters, and President Obama signed it into law. One of the reforms included in Biggert-Waters directs FEMA to “monitor the expenses and profits of insurance companies participating in the NFIP.” According to the letter’s signatories, FEMA has yet to implement the rules necessary to fulfill this oversight.

Last May, Roy Wright, FEMA’s deputy associate administrator for insurance and mitigation, announced changes to the NFIP aimed at increasing the program’s transparency and oversight.

One of the program changes outlined by FEMA included a redesigned appeals process for policyholders who are not satisfied with the amount they received for their initial flood claims. Another change also calls for the implementation of a FEMA litigation oversight team to help with legal costs from flood litigation.

As discussions regarding the next NFIP reauthorization continues, the role of private insurance in the NFIP remains in the spotlight. The Big “I” strongly supports a reformed and modernized NFIP and believes the private market has a role to play as a complement to the program, but not as a replacement.

At a flood insurance hearing earlier this year, the Big “I” testified that any legislation should maintain a balance between the private market and the NFIP to avoid adverse selection. The association expressed support for H.R. 2901 and S. 1679, the “Flood Insurance Market Parity and Modernization Act,” by Reps. Dennis Ross (R-Florida) and Patrick Murphy (D-Florida) and Sens. Dean Heller (R-Nevada) and Jon Tester (D-Montana). The Big “I” specifically supports this bill because it ensures that policyholders can return to the NFIP without losing their grandfathered status or subsidy if they had previously left the program and obtained coverage in the private market and that coverage no longer meets their needs. The bill passed the full House by a 419-0 vote and now awaits Senate consideration.

Throughout the NFIP reauthorization process, the Bill “I” continues highlighting the essential role agents assume in the delivery of flood insurance through the WYO program. Specifically, the association focuses on the agent’s role in selling and servicing these policies, and how agents are integral players in ensuring that consumers are properly protected from flood risks. 

Jen McPhillips is Big “I” assistant vice president of federal government affairs.