House passes $1.4T spending bill reauthorizing TRIA, NFIP and repealing Cadillac Tax
Major insurance industry groups and representatives hailed the three insurance-related provisions included in the bill.
The House passed a $1.4 trillion spending package on Tuesday that would fund federal agencies through September 2020 and avoid a government shutdown pending President Trump’s signature on the bill by Dec. 20. For the insurance industry, the bill was a win as it included three policy priorities of several industry groups including the National Association of Professional Insurance Agents (PIA National), the Independent Insurance Agents & Brokers of America (the Big “I”) and the National Association of Mutual Insurance Companies (NAMIC).
These groups and other industry representatives have expressed support for the House budget bill provisions that include a 7-year reauthorization of the Terrorism Risk Insurance Act (TRIA), an extension of the National Flood Insurance Program (NFIP) and a repeal of the Affordable Care Act’s “Cadillac Tax,” which would have imposed a 40% tax on health benefits that exceed an established annual cost.
On the Cadillac Tax, the Big “I” said in a statement, “Without repeal, this harmful tax would hit many of our small business members and their clients starting in 2022, and over time, would affect more and more individuals because the tax threshold is tied to a slow measure of inflation. This snowball effect would do irreparable damage to the employee benefits marketplace.”
In a statement, NAMIC representatives commended Congress’s reauthorization of TRIA.
“Today’s vote will not only help protect our economy from the threat of terrorism but also help communities across America continue to grow and flourish,” Jimi Grande, senior vice president of government affairs for NAMIC, said in a statement. “The Terrorism Risk Insurance Program helped us rebuild in the wake of one of our nation’s darkest days, and it continues to provide much-needed protections for the U.S. economy.”
Insurance industry applauds NFIP extension
On the NFIP reauthorization, Craig Poulton, CEO, Poulton Associates, LLC, which administers the Natural Catastrophe Insurance Program, said:
“Serial temporary reauthorizations of the NFIP by Congress allow the NFIP to continue charging rates that are unfair, not only to the program’s insureds and taxpayers but to tomorrow’s homeowners, who will be condemned to a future of inevitable, dramatic and unexpected rate increases as a result of Congressional inaction.”
Poulton adds, “When Congress kicks the can down the road with temporary NFIP reauthorizations they incentivize reckless development in flood-prone areas, which will certainly result in billions more in unfunded losses, not to mention the needless loss of life and property. The single most important thing Congress can do to alleviate the nation’s flood insurance crisis would be to enforce their mandate requiring the NFIP to raise its rates to actuarially correct levels.”
Simple calculations using the NFIP’s own data reveal that overall flood insurance rates charged by the NFIP are lower today than they were seven years ago when Congress instructed the NFIP to raise its rates in the Biggert-Waters Flood Insurance Reform Act of 2012 and the subsequent Homeowners Flood Insurance Affordability Act of 2014.
“Artificially low flood insurance rates incentivize perverse actions, which result in perverse outcomes to the detriment of flood insurance buyers, taxpayers and unsuspecting property owners who are unfortunate enough to purchase structures in low-lying areas that should never have been developed,” Poulton concludes.
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