NAIC COMMENDS FLOOD INSURANCE REFORM
U.S. House of Representatives Passes Bill to Modernize
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 Louisiana.

“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.”