As Congress seeks to reform the NFIP ahead of the Sept. 30 expiration date, the U.S. House of Representatives is attempting to pass legislation to reauthorize the NFIP as early as June. Today, the House Financial Services Committee Republican leadership released six discussion draft bills and accompanying summaries.
The six draft bills are currently expected to form the basis for any NFIP reauthorization bill or bills the House potentially passes. However, the drafts may change, and the U.S. Senate may offer alternative proposals.
One noteworthy provision in the draft bills would have the effect of capping compensation for WYOs, the insurers that administer the NFIP, at no more than 25% of policyholder premiums before various federal fees and surcharges apply. Currently, WYO companies receive approximately 31% of policyholder premiums before various federal fees and surcharges are added to administer the NFIP. From that amount, WYOs pay about half to insurance agents, in addition to paying vendors, state premium taxes and other costs.
The Big “I” opposes the cap and is concerned that such a drastic cut to the WYO program compensation for carriers and agents will limit the delivery mechanism for flood insurance and ultimately force insurers and agents to leave the market. The Big “I” will continue advocating against cuts to the WYO program and any reforms that would negatively impact consumer access to flood insurance.
Big “I” staff is currently reviewing the full proposal and will provide further information in future editions of News & Views.
Jennifer Webb is Big “I” federal government affairs counsel.
