Last week, the Big “I” submitted comments to FEMA on its Advanced Notice of Proposed Rulemaking entitled: Revisions to Methodology for Payments to Write Your Own (WYO) Companies.
As previously reported in News & Views, FEMA offered three payment options in the proposed rule—two of which would rely on National Association of Insurance Commissioners (NAIC) WYO flood data. Yet, the agency also discussed the inconsistencies and inaccuracies of the NAIC data. FEMA also introduced a third payment methodology based on direct invoicing but expressed concerns about the idea in the proposed rule as it would “likely create significant administrative burdens for the NFIP and WYO companies.”
The Big “I” stated, “while one aspiration of the Biggert-Waters Flood Insurance Reform Act of 2012 was to consider ways to ensure reimbursements track ‘the actual expenses’ imposed by the system, we fear the extra administrative burden and inaccurate data of the proposed methodologies would add additional costs and complexities to WYO carriers and agents that participate in the program and would negate any possible benefit of the revisions.”
In discussing the role of the agent in dealing with the complexity of the NFIP, the association expressed concern that any additional administrative burden or reduced compensation may lead to fewer producers who are willing to participate in the program and thus lower NFIP take-up rates leading to market disruption and harm to consumers.
Heather Eilers-Bowser is Big “I” federal government affairs counsel.