FLOOD INSURANCE REFORM
U.S. House of Representatives Passes Bill
The National Flood Insurance Program
The National Association of Insurance Commissioners (NAIC) commends the U.S.
House of Representatives for passing H.R. 4973, the Flood Insurance Reform
and Modernization Act of 2006.
Likewise, Rep. Richard Baker (R-LA) and Rep. Barney Frank (D-MA) are to be
commended for their leadership in sponsoring the bill that reforms the
National Flood Insurance Program (NFIP). The NFIP is an important component
of the government’s response to natural catastrophes, and the NAIC
appreciates the leadership of Rep. Baker guiding this legislation that will
help provide funding to pay outstanding claims stemming from the 2005
hurricane season, as well as modernize the program to address problems with
how it is structured.
The NAIC also commends the inclusion of state-sponsored, non-binding
mediation in the bill, an effort driven by Rep. Debbie Wasserman Schultz
(D-FL) and Rep. Ginny Brown-Waite (R-FL). Non-binding mediation offers
policyholders a proven and cost-effective solution to resolve cases
involving various insurers and the NFIP.
Insurance companies and policyholders have a strong self-interest in
settling claims quickly outside the expensive and time-consuming litigation
process. Those who are not satisfied with the process, either policyholders
or insurers, retain their right to go to court, but mediation’s exceedingly
high success rate demonstrates that most parties prefer a speedy and
efficient alternative for reaching a good faith settlement. The mediation
concept was pioneered by Florida, and adopted by Alabama, Mississippi and
“As state insurance officials, we recognize that insurance is as much a
promise as it is a product,” said Alessandro Iuppa, NAIC President and Maine
Superintendent of Insurance. “Part of our responsibility is ensuring that
the insurance companies we oversee are structured and capitalized to keep
their economic promises to policyholders. We are greatly encouraged that
this legislation, should it become law, will allow the NFIP to do the same,
and keep its promise of economic recovery to flood insurance policyholders.”