2007 Hurricane Season Gone but Not Forgotten

That gigantic breeze you might have heard last Friday was not a loud gust of wind, but a huge sigh of relief among members of the insurance industry and coastal residents. Nov. 30 was the official end of the hurricane season. Despite dire predictions for an increased number and severity of storms, the U.S made it through another hurricane season unscathed.

While some politicians focused on the devastation of the 2004 and 2005 hurricane seasons to propose legislation intended to punish the insurance industry, there were some positive steps made this year that could lead to a stronger, healthier homeowners insurance market.

Flood Reform

NAMIC has worked vigorously with members of the House and Senate on legislation to reauthorize the National Flood Insurance Program, which expires next fall.

A measure passed by the House of Representatives would provide funding for mitigation programs, updates to the nation’s flood zone mapping, and incentives to encourage more homeowners to secure flood insurance coverage. Unfortunately, it also includes an amendment that would add wind coverage to the National Flood Insurance Program.

With the NFIP already in debt, adding wind coverage to the program would put taxpayers on the hook even more – for something the private insurance market is able to handle. A companion bill passed by the Senate Banking Committee is more promising, in that it does not include the wind provision. It does contain a measure that would wipe out the more than $18 billion NFIP debt, which NAMIC believes is key to the financial soundness of the NFIP. That legislation has yet to be considered by the full Senate, after which the two chambers would work out differences in the bill. It’s unlikely the bill will get final approval before next year.

Building Codes

Legislation introduced in October would increase the amount of federal monies available to states that enact and enforce nationally recognized statewide building codes. Specifically, it would add 4 percent to the money a state would be eligible to receive under current disaster relief legislation.

With eight co-sponsors, NAMIC is working with the Building Code Coalition to locate additional co-sponsors and find a champion for a companion bill in the Senate. Separate legislation may also be introduced in the House that would establish $100 million for Community Development Block Grant funds that would be used to help local officials enforce building codes.

Homeowners Insurance Legislation

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, introduced two measures NAMIC will most likely support. The Homeowners Insurance Assistance Act of 2007, would provide tax credits to homeowners to offset the cost of their premiums. The Property Mitigation Assistance Act of 2007 would provide $200 million in annual funding to states for mitigation assistance. NAMIC supports the goals of both bills and is considering whether to officially endorse them.

NAMIC is opposed to a House-approved measure that would provide a federal backstop for state-sponsored insurance programs to help homeowners recover from damages inflicted by massive natural disasters. NAMIC is working against this legislation, as the association believes it would encourage states to create risky state funds similar to the fund in Florida, which many experts agree is woefully underfunded and leaves taxpayers on the hook for any future events. NAMIC also has concerns that the legislation would crowd out private markets. Senator and presidential-hopeful Hilary Rodham Clinton proposed similar legislation in the Senate.

Natural Disasters

A measure passed by the Senate Banking Committee would create a commission to consider and report on ways to address natural disasters. NAMIC worked very closely with the committee on the drafting of the bill, and strongly supports it. The committee members have told NAMIC they will oppose consideration of massive natural disaster reform until the commission bill is passed and the panel’s report is concluded.

Direct questions to NAMIC’s Senior Federal Affairs Director Justin Roth.

Posted: Tuesday, December 04, 2007 12:00:00 AM. Modified: Tuesday, December 04, 2007 11:01:26 AM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.