NFDA - National Flood Determination Association Optional Wind and Flood Congressional Hearing

Optional Wind and Flood Congressional Hearing

The House Financial Services Committee held a hearing on wind and flood coverage on July 17, 2007. The wind and flood policy was originally proposed as the Multi-Peril Insurance bill, H.R. 920, by Rep. Gene Taylor (D-MS). Its language was subsequently added to the House flood insurance reform bill H.R. 3121, and a probable amendment to add this provision to the Senate bill S.2284 is expected when the full Senate considers its bill. Senators Martinez (R-FL) and Schumer (D-NY) have indicated their intent to offer the amendment.

Three panels testified at the hearing on H.R. 920: a panel of several Members of Congress from Louisiana and Mississippi; a federal government panel including David Maurstad, FEMA assistant Director for Mitigation and Insurance, and Phillip Swagel, Assistant Secretary of the Treasury for Economic Policy; and a third panel including Cheryl Small, Policy Advisor for the National Flood Determination Association.

Testifying along with Ms. Small were Pam Pogue, former Chair of the Association of State Floodplain Managers; Sandy Praeger, Kansas Insurance Commissioner for the National Association of Insurance Commissioners; Ted Majewski for the Property Casualty Insurers, American Insurance Association and the National Association of Mutual Insurance Companies; Anderson Baker, a Louisiana insurance agent; Dr. Robert Hartwig, President and Chief Economist for the Insurance Information Institute; and David Conrad, Water Resources Specialist for the National Wildlife Federation (NWF) and lead author of the NWF's report "Higher Ground" regarding repetitive flood losses.

During the hearing, Rep. Taylor very effectively made his case that optional wind/flood coverage would avoid the claims adjustment programs that were so prevalent following Hurricanes Katrina and Rita. He stated that the program would be "revenue neutral" because it is offered at actuarially sound rates. However, both federal witnesses and the majority of the third panel witnesses expressed various reservations about adding the optional wind and flood coverage to the NFIP.

Cheryl Small presented testimony on behalf of the NFDA expressing concerns and raising questions about the bill. While acknowledging the confusion in claims adjustment over damages caused by wind or flood, she stated that the addition of such an unknown new exposure could be a serious threat to the future stability of the NFIP. Ms. Small's testimony can be downloaded from the "Resources" section found on this page.

Resources