WASHINGTON (May 26, 2011) Legislation introduced today by Sen. Roger Wicker (R-Miss.) to address the problems of wind versus water disputes in the aftermath of a severe storm contains both positives and negatives, according to the National Association of Mutual Insurance Companies (NAMIC).
“We appreciate Sen. Wicker’s willingness to address this complicated issue and look forward to working with him to find a solution that works for everyone,” said Matt Gannon, assistant vice president of federal affairs for NAMIC. “However, we have some concerns that his plan could cause more confusion for insurers and consumers in the aftermath of a major flood.”
Under the Wicker plan, officially dubbed the Consumer Option for an Alternative System to Allocate Losses (COASTAL) Act, the government would establish a system to collect data from named storms to help determine if damage to a particular property was caused by wind or water. The bill would also have the government establish an allocation plan to set how much should be covered under a windstorm or flood insurance policy for indeterminate claims, raising the specter of a greater intrusion by the federal government into the private insurance market.
“Under the COASTAL Act, for the first time a federal agency would be telling state-regulated property/casualty insurance companies what they have to pay in claims,” said Gannon. “NAMIC has very significant concerns about this encroachment by the federal government into the private insurance market.”
However, the proposals in the COASTAL Act that help move the NFIP towards financial stability and off the backs of the taxpayers are a welcome addition to the debate, according to Gannon. “This is a very complex problem, and it’s important to make sure we enact a solution that will protect those homeowners who need flood insurance coverage without expanding the federal government’s role or adding to the taxpayer burden,” he said. “We’re glad Sen. Wicker is willing to address this difficult issue, and we look forward to working with him.”
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