NAIC Panel Begins Push to Recommend NFIP Reforms
WASHINGTON //BestWire// - A National Association of Insurance Commissioners panel will host a hearing April 5 to discuss possible recommendations to reform the National Flood Insurance Program.
Panel Chairwoman Teresa Miller, Pennsylvania insurance commissioner, said the committee should develop ideas on NFIP reform that would help the NAIC make recommendations to Congress when the NFIP is up for reauthorization in 2017. And she said the panel should stay on top of congressional action on House Bill 2901, designed to boost development of a private option to a flood insurance market dominated by the NFIP. The bill includes a provision that allows flood insurance sold by surplus lines insurers to meet mandatory requirements under the NFIP (Best’s News Service, March 2, 2016).
Ethan Sonnichsen, the NAIC’s director of government relations, told the panel it had much groundwork to lay out during 2016 in order to help the NAIC bring recommendations before the NFIP expires. He told the panel it should look at its own experiences as insurance regulators to develop ideas to work with and then consider other areas that might be appropriate.
He said panelists should consider how consumers will act with private carriers and what issues would develop within the agent/broker community. Sonnichsen said panel members should be practical about some issues, such as whether the NFIP should be disbanded, because the private market is still very small and the NFIP’s 5 million policyholders are unlikely to gravitate to private markets quickly.
The panel also tentatively scheduled a conference call for either late April or early May to discuss how regulators might address allowing surplus lines insurers to sell private flood insurance.
The NAIC panel plans to hear from the surplus lines industry and consumer groups concerning whether surplus lines insurers are adequately prepared to work with individual consumers when historically they have not been set up to do so. Sonnichsen said surplus lines have been selling flood insurance to commercial markets only.
The Consumer Federation of America has opposed the bill, in part because of concerns the surplus lines insurers will cherry-pick the best policies from the NFIP, leaving the program further in debt with less-desirable policies to bear.
(By Thomas Harman, Washington Bureau manager, BestWeek: Tom.Harman@ambest.com)