The hearing was the insurance highlight in a week in Washington that saw continued uncertainty over flood-insurance rate hikes, and a victory for crop insurers and their agents in the form of the recently-signed farm bill that includes a big boost to the crop-insurance program.

The House subcommittee hearing was called for in response to the FIO's regulation modernization report released late last year.

During the hearing, Capuano said, “There are some of my colleagues here who hate the concept that FIO even exists. They hate the concept of them even asking questions and trying to put a focus on this discussion.”

He added, “I would like to ask each of you, if you had a choice, if I made you emperor of the universe, and you could unilaterally make this decision, now—you only have two choices here. I'm not going to give you multiple choices, because that gets too complicated, and I don't have that choice. I get to vote red or green, so you may as well vote red or green.”

One-by-one, the representative of each trade group voiced support.

Paul Ehlert, president of Germania Farm Mutual Insurance Association, Brenham, Texas, testifying on behalf of the National Association of Mutual Insurance Companies, said, “I think FIO definitely has a role in the international market. And we would support FIO in that market, as well.”

The Independent Insurance Agents & Brokers of America supports the FIO as it stands, said Jon Jensen, president, Correll Insurance Group, which is based in South Carolina.

Frank Nutter, president and CEO of the Reinsurance Association of America, said the RAA supported the FIO, “with the authority they have,” and “for covered agreements in particular.”

The Property Casualty Insurers Association of America also said it supported “FIO as it is,” as Robert Restrepo, president, chairman and CEO of State Auto Insurance Companies testified.

Scott Sinder, a partner at Steptoe and Johnson who testified on behalf of the Council of Insurance Agents and Brokers, added, “We've been big supporters of FIO since day one.”

J. Stephen “Stef” Zielezienski, senior vice president and general counsel of the American Insurance Association, added, “Yes, we support FIO and believe it has a crucial international role.”

For his part, FIO Director Michael McRaith said the state versus federal oversight discussion is a “binary debate” that is a relic of a bygone era. In contrast to previous eras, the world of insurance today is vast, complex, diverse and global, McRaith said.

It is “not as it was, or as one might wish it were,” he said.

Rep. Randy, Neugebauer, R-Texas, chairman of the subcommittee, did take issue with McRaith on the activities of International Association of Insurance Supervisors (IAIS), which is proposing ComFrame as a model for the supervision of internationally active insurance groups. “Identify the problem,” Neugebauer said to McRaith. ComFrame seems to be “a solution in search of a problem,” he said.

McRaith defended FIO's role in the international-insurance market, saying that FIO is unlikely to sit back and be a spectator, and that it will do what it believes is in the “national interest” for such a critical component of the economy and consumers' lives.

Industry a winner in new farm bill

As for the farm bill, both crop insurers and agents were seen as beneficiaries of major changes in the farm-subsidy system that establishes a new program to cover “shallow losses,” or losses incurred by farmers but not covered currently by crop insurance.

Neugebauer proposed legislation in the last two Congresses supporting such a change as more appropriate than the direct subsidy program that has been a hallmark of prior farm-aid programs.

The Supplemental Coverage Option (SCO) would be available for purchase by crop producers as an additional policy to cover part of the deductible under the producer's underlying policy.

R.J. Lehmann, a senior fellow at the R Street Institute, said the SCO covers up to 90% of a farmer's crop revenue when elected in combination with a conventional crop-insurance policy.

In its latest Weekly Credit Outlook, Moody's Investor's Services said the new farm bill is “credit positive” for U.S. crop insurers because it further cements their pivotal role in the U.S. government's support of the agricultural sector. Moody's said the bill expands existing crop-insurance programs and restricts the ability of the Department of Agriculture to renegotiate lower payments to crop insurers during the term of the law.

Moody's said the bill expands the use of the federal multi-peril crop insurance (MPCI) program by approximately $7 billion in added crop-insurance protection spread over the coming decade. It is available to farmers only if they record actual losses.

The law also eliminated a much-criticized $5 billion annual subsidy to farmers (handled outside of the crop-insurance program) who received the payments whether they grew crops or not.

“The final farm bill conference report strengthens the Federal Crop Insurance Program (FCIP) and recognizes it as the central risk management tool for farmers and ranchers across the country,” said Robert Rusbuldt, president & CEO of the Independent Insurance Agents and Brokers of America. “Independent insurance agents and brokers play an integral role in the efficient and effective sales and servicing of this program,” Rusbuldt said, meaning that agents should receive higher commissions as a result.

The new program means that, the FCIP will not have payment limits, but it will be tied to conservation compliance, Rusbuldt said.

“Opposing payment limits for the FCIP was a central goal for the IIABA as the farm bill went through the legislative process,” says Charles Symington, IIABA senior vice president for external and government affairs.

The bill “cemented crop insurance” as the cornerstone of farm policy, and “proves that crop insurance's popularity among farmers has reached an all-time high,” Tim Weber, chairman of the American Association of Crop Insurers (AACS) and National Crop Insurance Services (NCIS), said today at the annual conference of the two trade groups in Scottsdale, Ariz.

There are 17 crop insurers.

Brandon Willis, administrator of the USDA's Risk Management Agency, which administers the law, said at the meeting that, now that the law has been enacted, the agency is focusing on quickly implementing it.

Willis said the Obama administration would prioritize implementation based on those programs that affect the most growers. He specifically mentioned ensuring a 2015 signup for the STAX program that provides enhanced insurance protection for cotton farmers and the new Supplemental Coverage Option for growers of other crops.

Flood uncertainty continues

As for flood, the House twice last week rejected the efforts of Democrats to put S. 1926, which delays National Flood Insurance Program rate hikes imposed by the 2012 Biggert-Waters Act for four years, on the House floor. What the House will do, and when, remains unclear.

However, a federal court in Gulfport, Miss., is reviewing a request by the Mississippi Insurance Commissioner Michael Chaney for an injunction barring the rate increases until the Federal Emergency Management Agency completes an affordability study. The suit has strong support from other coastal and Gulf states and a decision could come down this week, some industry lawyers say.