NAMIC Also Criticizes Wind Coverage Inclusion Flood Reform Legislation

The National Association of Mutual Insurance Companies (NAMIC) also issued a statement asking that the provision to add wind coverage to the nation’s flood insurance program, which was adopted last week by the House Financial Services Committee, not be passed by the full House.   
  
“The NFIP is already in dire need of reforms, many of which are addressed in the legislation,” said Justin Roth, NAMIC’s senior federal affairs director. “But adding wind coverage to this program will only drive it further into debt, undoing any good that the rest of the legislation could achieve.”  
  
The program is in a deficit due to the high cost of claims resulting from the 2005 hurricane season. The legislation, H.R. 3121, the Flood Insurance Reform and Modernization Act of 2007, would increase the NFIP’s borrowing authority to enable it to pay those claims.   
  
The measure also provides funding for mitigation programs, mapping updates, and incentives to encourage more homeowners to secure flood insurance coverage.   
  
NAMIC also urged Congress to forgive the NFIP’s debt in addition to these reforms. “It’s imperative that Congress eliminate the debt that the NFIP has taken on as a result of the 2005 storms.” Roth said. He explained that as things stand now, the NFIP will use a large portion of its annual premiums in interest payments on the debt. “The last thing we want to do is leave this program in a constant state of flux,” he said. “It is important for policyholders to know that this program is on solid ground and will have the money to pay claims in the event of future flooding.”  
  
But Roth said the effect on homeowners – and taxpayers in general – would be vastly different if Congress allows wind coverage to be included in the NFIP. “Adding windstorm coverage to the debt-ridden NFIP will only add to taxpayers’ liability,” Roth said. “It won’t make it easier for homeowners to collect coverage for wind-damaged homes.”  
  
Roth said the private insurance market is the appropriate vehicle to provide windstorm coverage to homeowners. He suggested other measures would better address insurance concerns among homeowners in hurricane-prone regions. “Encouraging stronger building codes and mitigation efforts, updating the nation’s flood zone maps and ensuring that homeowners in flood zones have adequate flood insurance coverage, and allowing the private market to charge actuarially sound rates are key,” he said. “Those steps, along with an improved NFIP, will go a long way toward guaranteeing homeowners' structural and financial security following hurricanes.”  
  
Founded in 1895, the National Association of Mutual Insurance Companies (NAMIC) is a full-service national trade association serving the property/casualty insurance industry with more than 1,400 member companies that underwrite more than 40 percent of the property/casualty insurance premium in the United States. NAMIC members are small farm mutual companies, state and regional insurance companies, risk retention groups, national writers, reinsurance companies, and international insurance giants.