ties. Griffin says some members of the
House Financial Services Committee
would like to see the NFIP’s debt forgiven, which he says might not be supported by a majority on that committee
at this moment.
Tom Santos, vice president of federal affairs for the American Insurance
Association (AIA), says some members
in the Senate want to talk about
making the NFIP more consumer-friendly, which is not discussed as
much in the House.
Other legislators place more emphasis on affordability for low-income
homeowners, says Jenn Fogel-Bublick,
a spokesperson for SmarterSafer.org, a
national coalition representing various
interests and industries. “I think there
has been a lot of agreement [between
legislators and interests in various
industries], and there is a lot of common ground. Flood insurance reform,
however, is not something that’s easy.
This is not an easy lift.”
WHAT WOULD IT LOOK LIKE?
Much has been said about steps that
can be taken to encourage greater
private-market participation in Flood
insurance. But what is the ultimate
goal for the insurance industry, and
what would be the perfect conditions
for a thriving marketplace?
Jimi Grande, senior vice presi-
dent, federal and political affairs for
the National Association of Mutual
Insurance Companies (NAMIC), says,
purely hypothetically, in a world
where Flood insurance could be built
from scratch, “I would start with
a principle that says rates should
always match risk, and risk should
always be properly communicated to
He adds, “And I think I would try
to make sure we didn’t develop in
places that are too risky.” He says
building on wetlands and low-lying
coastal areas tends to be bad for the
environment and a flood risk “that
people shouldn’t assume. It’s not a
good idea to build a house in an area
we know is going to flood.”
The country, says Grande, could
be smarter and focus on mitigating
or even migrating from coastal risks.
Asked how that would work given
the vast economic interests situated
in risky coastal areas, Grande points
out, “Now, that’s practical versus our
make-believe world of what it should
look like. The problem is we’ve built
this economic reality over the last 40
years. You can’t just undo it.”
John Dickson, president, NFS
Edge, an affiliate of Aon National
Flood Services, says, in the ideal
Flood insurance marketplace, private
companies would have to be re-
sponsible citizens. That means, he
explains, contributing to efforts such
as mapping and mitigation.
Dickson notes that flood on a
wide scale is a unique risk that can
be influenced by land clearance, development and more. Mapping must
constantly evolve to keep up with the
changes, and FEMA does not have
the manpower to do that by itself.
In some cases, flood risks may have
long changed in an area covered by
a given flood map.
Brady Kelley, executive director of
the National Association for Surplus
Lines Offices (NAPSLO), offers his vision: “In a perfect world, we believe
the private market should be abso-
42 | FEBRUARY 2017 | NATIONAL UNDERWRITER PROPERTYCASUALTY360.COM
Last year began with two hearings held by the Housing and Insurance Subcommittee of
the House’s Financial Services Committee in January, and ended with that subcommittee’s
then-chairman, Rep. Blaine Luetkemeyer, R-Mo., releasing a set of well-received draft Principles
for Flood Insurance Reauthorization and Reform in December. In between, the Senate held
a pair of Flood insurance-related hearings, and industry members say that in general, they had
substantive talks throughout the year with legislators in both chambers of Congress.
Luetkemeyer’s draft, the culmination of the House subcommittee’s work in 2016, contained
no surprises for industry representatives, but encompassed many of the broad principles they
support. “I think he’s done excellent work,” says John Dickson, president of NFS Edge (an
affiliate of Aon National Flood Services), adding that the principles clarify the year’s discussions
and include ideas to ensure a sustainable NFIP.
Luetkemeyer’s five general principles include:
and capital markets to transfer risk — a step the program took in September 2016
when FEMA secured its first placement of reinsurance for the NFIP. FEMA later
expanded that placement in January by transferring $1.042 billion of the NFIP’s
financial risk to 25 reinsurers.
measures to encourage insurer participation in the marketplace.
“I think it’s a realistic list,” Griffin says, adding his understanding is that legislation is well into
the drafting stage, and he expects most of the ideas in the draft principles to be in included.