Congress would force itself to deal with the
program’s reauthorization sooner, which hasn’t
happened. More than two months after
decoupling the NFIP from the rest of the federal
appropriations process, the lack of any congressional action on reauthorization is alarming.
Although we remain frustrated by Congress’s
inaction as the clock ticks toward July 31, the
House of Representatives did pass a bill in late
2017, the 21st Century Flood Reform Act (H.R.
2487). This bill would provide a five-year reauthorization and includes PIA-supported reforms to
the program, such as overhauling the flood mapping process, allowing the use of more precise
risk-assessment tools to determine premiums,
and creating an appeals process for local governments or homeowners to challenge federal mapping decisions. Many of these items will benefit
consumers and strengthen the future viability of
FLAWED WYO PROVISION
PIA ultimately opposed H.R. 2487 because of a
short-sighted provision that would likely lead to
fewer agents selling NFIP policies. The provision
in question would lower something called the
Write-Your-Own (WYO) reimbursement percentage by two or three points. WYO companies are
insurance carriers that participate in the NFIP
and are reimbursed by the government for the
expenses associated with administering flood
insurance policies; this reimbursement is called
the WYO expense allowance. The reimbursement
is used by carriers to pay administrative expenses
as well as agent commissions, among other costs.
To continue to stay in the NFIP program, carriers
will likely be forced to pass any cut to the WYO
rate on to agents through their commissions.
For the National Associaiton of Professional
Insurance Agents (PIA), a provision that is
expected to lead to a cut to agent commissions
was — and continues to be — a deal breaker.
Cutting agent commissions will discourage
agents from participating in the program, and it
will decrease consumer participation in the NFIP.
Any reduction in the number of policies in
force will jeopardize the success of any reforms
being enacted. In the aftermath of the devasta-
tion wrought by Hurricanes Harvey, Irma, and
Maria last year, it is counterproductive to include
a provision that undermines the NFIP’s sales
force and makes it less likely that homeowners
will purchase flood insurance.
Furthermore, cutting agents out of the NFIP
sales process is completely at odds with policy-
makers’ statements, made during numerous
congressional hearings on flood insurance,
correctly noting that the NFIP needs more, not
fewer, policies in force to fiscally strengthen it.
Finally, minimizing the value of agents could
thwart the Federal Emergency Management
Agency’s ambitious goal of doubling the number
of policies in force by 2023.
PIA will continue our advocacy for a long-term
reauthorization of the program that recognizes
the essential role independent agents play in
providing expert advice to consumers.
PIA calls on Congress to advance legislation
that includes many of the provisions in H.R.
2487 but that also does not cut the WYO
Most importantly, the time to act is not at the
end of July when the current temporary extension runs out and the height of the hurricane
season looms. The time to act is now. Failure to
act is not an option.
Jon Gentile ( firstname.lastname@example.org) is vice president of government relations of the National Association of Professional
Insurance Agents (PIA).
Congress could recess for August with the NFIP lapsed.
During a lapse, new NFIP policies can’t be issued, requests
to increase or decrease the scope of coverage can’t be
processed, and renewals can’t be issued.
PIA has been
of this program,
preferably for five
the House and
Senate can’t find
for a long-term
by July 31, the
lapse. During a
lapse, new NFIP
policies can’t be
to increase or
decrease the scope
of coverage can’t
can’t be issued.
We find it hard
to fathom that, in
the middle of the
leave many of