The hearing covered topics including the structure of the National Flood Insurance Program (NFIP), the role of private flood insurance, and Risk Rating 2.0.
Today, the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing entitled, “Reauthorization of the National Flood Insurance Program, Part II." As of press time, the hearing was still ongoing but has covered several important topics, including the structure of the National Flood Insurance Program (NFIP), the need to reauthorize the program, affordability issues, mapping and mitigation, the role of private flood insurance, and last but certainly not least, Risk Rating 2.0.
The sole witness for this hearing was David I. Maurstad, deputy associate administrator for the Federal Insurance and Mitigation Administration at FEMA. In this position, Maurstad has played a leading role in the development of Risk Rating 2.0. Early on in his testimony, Maurstad urged Congress to approve a multi-year reauthorization of the NFIP with meaningful reforms before its scheduled expiration on Sep. 30, 2021.
He also noted that the nation's flood loss experience over the past 17 years is proof that the NFIP needs to do better. Specifically, Maurstad stated, “it is time to rethink the NFIP's fundamental approach to reducing losses from floods and increasing investment in mitigation."
Maurstad later turned his attention to Risk Rating 2.0 and noted that the NFIP's rating methodology has not been updated in more than 40 years and that he believes “Risk Rating 2.0 delivers a more equitable and risk-informed NFIP."
“Risk Rating 2.0 will change the landscape of flood insurance, enhance risk communication, and enable better floodplain management—ultimately resulting in greater resilience," Maurstad added. “Risk Rating 2.0 will help put the NFIP on a financially sound path; and will help disaster survivors recover more quickly after floods."
Last week, FEMA announced that the NFIP will be hosting a number of Risk Rating 2.0 – Equity in Action webinars designed specifically for insurance agents. The webinars will take place throughout June and July.
In later questioning of Maurstad, Sen. Bob Menendez (D-New Jersey) expressed his concern about the amount paid to Write Your Own (WYO) companies to write and service NFIP policies. Importantly for independent agents, Sen. Menendez noted that agents should be paid at least a 15% commission. Minutes later, Sen. John Kennedy (R-Louisiana) expressed his grave concerns about Risk Rating 2.0 and how FEMA was implementing the program.
As Congress and the Biden administration continue to discuss NFIP reauthorization and Risk Rating 2.0, the Big “I" will provide members with updates in the weekly News & Views e-newsletter.
Wyatt Stewart is Big “I" assistant vice president of federal government affairs.