Insurance bill up for vote

Taylor likes chances of proposal to add wind to flood policies

Posted on Tue, Sep. 25, 2007
By MARIA RECIO
SUN HERALD WASHINGTON BUREAU

WASHINGTON --
The House is expected to vote Thursday on expanding federal flood insurance to include wind damage, a landmark change brought on by the insurance industry response to Hurricane Katrina.

Rep. Gene Taylor, D-Bay St. Louis, who lost his home in Katrina, pushed for the "multi-peril" provision to the Flood Insurance Reform and Modernization Act of 2007, after seeing constituents get little or no payments for privately insured wind damage and full coverage from the federal flood program. Taylor sued his insurer and settled earlier this year.

After pushing a bill for over two years, an invigorated Taylor is looking forward to the upcoming vote. "I'm excited about it," he said. "I'm not taking anything for granted. We've got almost every Democrat and some Republicans on the Gulf Coast from Louisiana, Mississippi, Alabama and Florida. It should be the necessary margin."

The legislation has a powerful advocate in the House: Speaker Nancy Pelosi, D-Calif., who made the issue a personal promise to the South Mississippi communities in visits to the region on Katrina anniversaries in August 2006 and last month.

Having the speaker's support "is huge," said Taylor. "She's been an incredibly huge help."

Pelosi lobbied or "whipped" Democrats when the bill was before the House Financial Services Committee in July. "She went to wavering Democrats," said Taylor, "and that's what it's going to take."

Pelosi is expected to push the issue again Wednesday at the weekly Democratic Caucus meeting.

"The bill has widespread support," said Steven Adamske, spokesman for the House Financial Services Committee. "We feel good about where this bill is positioned."

Under the bill, approved by the financial services committee 38-29 in July, policyholders of the flood insurance program would be able to purchase wind insurance policies, although wind coverage would be not available as a stand-alone policy.

The multiple-peril residential policy limit would be set at $500,000 for the structure and $150,000 for contents. The bill increases the maximum coverage for flood insurance policies from $250,000 to $335,000 for residences. The program would be paid for from actuarially determined premiums.

Opponents of the bill, including insurers and some public interest groups, say that the flood insurance program is essentially bankrupt and that adding another liability would eventually hit the taxpayers. The flood insurance program had to borrow $17.5 billion more than it took in because of Katrina and Rita claims.

"We don't think this is the time to expand the flood insurance program, " said Don Griffin, a vice president of the Property Casualty Insurers Association of America. "You don't know how many people will buy the program, so you don't know how to price it."

Dennis Kelly, spokesman for the American Insurance Association, said, "We do not want to see any mechanisms that displace the private market."

But Taylor and other bill supporters point to the role the states have had to take, creating so-called "wind pools" in states such as Mississippi and Florida to provide coverage to coastal residents after insurers stopped writing policies.

Taylor said he is bracing for an insurance industry-backed battle on the House floor. "I expect a very contentious fight," he said.

Flood Insurance Reform and Modernization Act of 2007
Here are the key features of H.R. 3121:

• Increases the amount FEMA can raise policy rates in any given year from 10 percent to 15 percent.

• Extends multiple-peril policies for wind damage where local governments agree to adopt and enforce building codes and standards designed to minimize wind damage.

• Allows any community participating in the flood insurance program to opt in to the multiple-peril option. The multiple-peril residential-policy limit is $500,000 for the structure and $150,000 for contents. Nonresidential properties could be covered to $1 million for structure and $750,000 for contents and business interruption.

• Increases the maximum coverage limits for flood insurance policies. New coverage limits would be $335,000 for residences, $135,000 for residential contents, and $670,000 for businesses and churches.

• Phases in actuarial rates for vacation homes and nonresidential properties beginning Jan. 1, 2011.

HOUSE FINANCIAL SERVICES COMMITTEE


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