WASHINGTON–The National Association of Insurance Commissioners and insurance industry trade groups are voicing support for legislation aimed at making the National Flood Insurance Program self-supporting.
But insurance groups continued to criticize an amendment inserted Tuesday when the bill passed, which requires the Government Accountability Office to investigate how insurance companies are determining whether hurricane home destruction is covered wind damage or an excluded flood claim.
A major concern is that the provision, introduced on the House floor by Rep. Gene Taylor, D-Miss., calls for an “investigation,” rather than a study, of the wind-vs.-flood issue.
The provision appears aimed at State Farm, which is being sued in federal court by Rep. Taylor, Sen. Trent Lott, R-Miss., and Federal Judge Lou Guirola over the handling of their claims for Hurricane Katrina damage to their houses.
Fraser Engerman, a spokesman for State Farm, said, “State Farm follows FEMA [Federal Emergency Management Administration] rules, procedures and guidelines, and makes its claims-paying decisions based on the facts surrounding each individual claim and the policy contract we hold with that customer.
“Even before Katrina, FEMA and the National Flood Insurance Program have had an ongoing review and claim re-inspection program to ensure appropriate NFIP guidelines have been followed,” he said.
Scott Duncan, a spokesman for the Property Casualty Insurers Association of America (PCI), added, “We oppose the Taylor amendment because it adds another duplicative layer of bureaucratic intervention, when the resources the amendment will utilize could be much better used to increase the program's affordability, effectiveness and outreach to consumers who are unaware of their flood risk.”
The NAIC voiced particular support for another amendment to the bill from Reps. Ginny Brown-Waite, R-Fla., and Debbie Wasserman-Schultz, D-Fla., that calls for state-sponsored, nonbinding mediation.
“Nonbinding mediation offers policyholders a proven and cost-effective solution to resolve cases involving various insurers and the NFIP,” said Alessandro Iuppa, NAIC president and Maine superintendent of insurance.
The National Association of Mutual Insurance Companies also voiced support. “It is important for Congress to address problems with the program soon, given that we are already in a new hurricane season,” said NAMIC senior federal affairs director Justin Roth. He said the bill serves policyholders while protecting taxpayers.
Ernie Csiszar, PCI president and chief executive officer, praised the House for passing the flood measure, at the same time urging quick action on a Senate flood measure that has passed the Senate Banking Committee but is still awaiting floor action.
Charles E. Symington Jr., senior vice president for government affairs and federal relations at the Independent Insurance Agents and Brokers of America, said the group is pleased NFIP's borrowing authority has increased.
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