Bipartisan Group Set to Introduce New, Concerning NFIP Legislation

This week, several members of Congress from both the U.S. House of Representatives and the U.S. Senate announced they were introducing legislation to reauthorize the NFIP for five years while also making a number of troubling changes to the program.

As of press time, Sen. Bob Menendez (R-New Jersey) was the expected lead sponsor of the National Flood Insurance Program Reauthorization Act of 2019 in the Senate. Sens. Bill Cassidy (R-Louisiana), John Kennedy (R-Louisiana), Jack Reed (D-Rhode Island), Kirsten Gillibrand (D-New York), Cory Booker (D-New Jersey), Elizabeth Warren (D-Massachusetts) and Marco Rubio (R-Florida) are expected co-sponsors. In the House, Reps. Frank Pallone (D-New Jersey), Bill Pascrell (D-New Jersey) and Clay Higgins (R-Louisiana) are expected to be the lead sponsors of the legislation.

The legislation would cap NFIP annual rate increases at 9%. Currently, NFIP rate increases are capped at 25%. The legislation also includes several controversial items that would damage the goal of increasing take-up rates in both the NFIP and the private market. Notably for Big “I” members, the legislation would cap Write Your Own (WYO) compensation at 22.46% of written premiums. Currently, WYO insurance companies receive 30% to administer the NFIP. WYOs pay insurance agents, vendors and state premium taxes, among other costs, from the allowance they receive. A reduction of this amount will undoubtedly lead to agent commission cuts. 

Additionally, the legislation would require FEMA to expand its introductory agent training class to include all agents who write for the NFIP direct program and WYOs. It would also require annual continuing education to remain current on changes in the Flood Insurance Manual, Elevation Certificate, ICC, mapping and any other modifications to the NFIP that influence policy rating. The legislation would also establish an Agent Advisory Council consisting of federal, state and local experts to make recommendations to FEMA on improving the customer service, including but not limited to the application and claims process, agent training needs and delivery.

Review a full section-by-section of the bill online.

Earlier this year, the House Financial Services Committee passed legislation to reauthorize the NFIP for five years by a unanimous vote of 59-0. The Big “I” supports that legislation as passed out of the committee and believes it will make reforms that will increase overall take-up rates through the NFIP and the private market.

Wyatt Stewart is Big “I” senior director of federal government affairs.