WASHINGTON, D.C., Nov. 19, 2013 — The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) today submitted testimony in a U.S. House of Representatives Committee on Financial Services Subcommittee on Housing and Insurance hearing entitled, “Implementation of the Biggert-Waters Flood Insurance Act of 2012: Protecting Taxpayers and Homeowners.”
After a multi-year lobbying effort by the Big “I” and others, the “Biggert-Waters Flood Insurance Reform and Modernization Act of 2012” (Biggert-Waters), was signed into law late last year. Biggert-Waters extended the NFIP for five years –until 2017– and made needed reforms to the program. Unfortunately, as the law has been implemented there has been widespread concern from consumers, bankers, realtors, homebuilders and insurance agents over two specific elements and their impact on NFIP premiums for many policyholders. These provisions are in Section 205 regarding elimination of subsidies for homes bought/sold and Section 207.
“Despite the good intentions of the law and its authors, it is clear that there are significant problems associated with its implementation,” says Charles Symington, Big “I” senior vice president for external and government affairs. “The Big ‘I’ recommends that Congress consider minor modifications to the Section 205 bought/sold provision and strongly recommends changes to Section 207 of the new law to ensure that the program works for policyholders while still protecting taxpayers.”
Section 205 phases out explicit subsidies for second/vacation homes, commercial properties, severe repetitive loss properties, properties undergoing substantial improvement and properties experiencing substantial flood damage and rebuild. However, it immediately eliminates all subsidies, with no phase-out, for properties bought and sold. Section 207 stops the “grandfathering” of policies located in communities with a new or redrawn map.
The Big “I” testimony opened by outlining the reasons why the association supports the NFIP and the Biggert-Waters legislation that modernized the program and shored up its finances to better protect consumers in the future. Then it explains why the Big “I” supports making some updates to the new law, particularly in Section 205 regarding properties bought and sold and Section 207. The testimony then closes by suggesting some possible changes that could be made to ensure the Biggert-Waters Act continues to put the NFIP on a path towards financial stability while also protecting consumers.
Regarding Section 205, the association noted that, “the Big ‘I’ is concerned about the impact that the bought/sold provision of Section 205 will have on individual consumers as well as the broader U.S. housing market.”
Additionally, “the Big ‘I’ has major concerns regarding the elimination of the ‘grandfather’ process via Section 207. The fact is that this provision will end up punishing good actors, those responsible homeowners that built or purchased homes in compliance with the known risks at the time, took responsible steps towards mitigation based upon the government maps in existence, and kept active NFIP policies.”
For the full text of the Big “I” testimony, which was submitted for the record, click HERE
for more information about the hearing and a full witness list.
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of approximately a quarter of a million agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.