PIA National Statement on the National Flood Insurance Program Reauthorization and Reform Act of 2019 (S. 2187)

In response to introduction in the Senate.
July 22, 2019

EDITORS: This statement is attributable to Jon Gentile, vice president of government relations of PIA National.

WASHINGTON — The following statement has been issued by the National Association of Professional Insurance Agents (PIA National) in response to the introduction in the Senate of the National Flood Insurance Program Reauthorization and Reform Act of 2019 (S. 2187) by Senator Bob Menendez (D-NJ). A House companion bill is expected to be introduced soon:

PIA National appreciates the introduction of this bill and the attention that has been given to the National Flood Insurance Program (NFIP) by Senator Menendez.

PIA National is heartened to see bipartisan, bicameral support for important reforms, many of which would benefit the NFIP and consumers. The bill contains many valuable provisions, like the creation of an Agent Advisory Council, an improved appeals process for consumers who wish to challenge claims and mapping decisions, and investments in improving mapping and mitigation.

However, the bill includes a provision that PIA National views as unacceptable: a reduction in the Write-Your-Own (WYO) reimbursement rate from 29.9 to 22.46 percent, a 25 percent cut from its current level. As a result, most, if not all, WYO insurance carriers could be pushed out of the program. Currently, fewer than 60 WYOs service about 85 percent of all NFIP policies. Any further limitation in carrier choice will hurt consumers, who benefit from competition and who value carriers that offer strong customer service and responsiveness to agents and consumers.

Most troubling for the program’s future is the likelihood that those WYOs that remain in the program will be forced to cut agent commissions to account for the reduction in the WYO rate. This will prompt agents to stop selling NFIP policies, because the reputational risk associated with doing so will no longer be sustainable, given the low commission rate. Consumers will be left without the expertise required to navigate this notoriously confusing program. Without an expert guiding consumers through the process, many consumers will follow the lead of their carriers and agents and opt out of the NFIP altogether. For a program that desperately needs a greater number of policies sold, it makes no sense to take this action, which will reduce the numbers of carriers, agents, and ultimately consumers involved in the program.

Furthermore, FEMA is currently soliciting comments on three proposals to rewrite the WYO reimbursement rate. Congress should allow that process to move forward, and avoid the agent and consumer confusion and disruption that enacting a temporary WYO rate would cause.

Finally, a bipartisan path to NFIP reauthorization already exists in the form of the House legislation that passed out of the Financial Services Committee unanimously last month. The House Financial Services package includes essential reforms to the program while leaving the WYO rate at its current level. PIA National fully supports the reauthorization of the NFIP and encourages passage by the full House and the Senate of the House Financial Services Committee package.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America SM.PIA’s web address is www.pianet.com.

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