NEW LEGISLATION DELAYS FLOOD INSURANCE PREMIUMS HIKES

The U.S. Senate passed the Homeowner Flood Insurance Affordability Act of 2014 yesterday by a vote of 67-32. The bill will delay the flood insurance rate increases implemented by the Biggert-Waters Flood Insurance Reform Act of 2012, as well as create a national registry for licensing insurance agents.

The bill stalls the premium increases by retaining flood insurance subsidies for four additional years, allowing the Federal Emergency Management Agency (FEMA) time to complete an affordability study and ensure the accuracy of its flood maps. The bill grandfathers in low rates for homeowners placed into a flood zone for the first time, or moved into a higher-risk flood zone due to the remapping. The bill also creates a National Association of Registered Agents and Brokers (NARAB).  The House of Representatives has already passed the NARAB Reform Act, which intends to streamline licensing for agents and brokers in states other than their own. The White House has expressed constitutional and budgetary concerns with the legislation; however, it has not threatened a presidential veto.

The legislation was praised by the Independent Insurance Agents and Brokers of America, whose president indicated the bill would mitigate the harmful financial effects of the Biggert-Waters legislation, while leaving the positive provisions of the bill intact. The American Bankers Association also supported the bill. The National Association of Professional insurance Agents (PIA) supported the legislation, however, advised the bill will only provide temporary relief for policyholders, as the bill does not address the underlying problem of the National Flood Insurance Program’s $24 billion debt.

The National Association of Mutual Insurance Companies criticized the legislation, stating the bill made flood insurance cheaper for policyholders at the American taxpayer’s expense. The senior vice president of the organization argued that the bill continues to hide the true risk to homeowners in flood-prone areas and failed to hold those individuals accountable for protecting their properties from flooding.
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