WASHINGTON (Oct. 2, 2007) – The National Association of Mutual Insurance Companies today recommended the Senate take swift action to reform the National Flood Insurance Program. With the NFIP slated to expire next year, members of the Senate Banking Committee are conducting a hearing today to consider proposals to make improvements to the debt-ridden government program.
“With this important issue now before the Senate, NAMIC is hopeful the committee will adopt bipartisan legislation similar to what it passed last year, which NAMIC supported,” said Justin Roth, NAMIC’s senior federal affairs director. “Flood reform is sorely needed sooner, rather than later.”
Today’s hearing follows last week’s House passage of a flood reform bill Roth described as flawed. “We were disappointed that the House chose to include in its legislation a provision that would add wind coverage to the NFIP,” he said. “Adding that peril to a program already facing an $18 billion debt would put taxpayers on the hook even more for something the private insurance market is able to handle.”
One of the biggest challenges that the NFIP faces is the low take-up rate – the number of homeowners that purchase flood coverage through participating insurers in the write-your-own program. NAMIC believes that one of the major reasons for the low take-up rate is the lack of private insurance company participation.
"There are thousands of insurance companies in America, and, yet, only 88 choose to participate in the WYO program," said Roth. "We hope that the Senate Banking Committee examines this program and can come up with solutions that will incentivize, not dissuade, insurance companies from participating in this very important program." NAMIC argues that if more insurers drop out, the take-up rate will continue to decline.
Last year's Senate flood reform was an effective piece of legislation, Roth said. “That bill included funding for mitigation programs, updates to the nation’s flood zone mapping, and incentives to encourage more homeowners to secure flood insurance coverage,” he said. “NAMIC will work with members of the Senate Banking Committee to ensure those provisions are once again included in any proposed legislation.”
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Posted: Tuesday, October 02, 2007 12:00:00 AM. Modified: Tuesday, October 02, 2007 9:44:16 AM.
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