Yesterday, Kevin McKechnie, SVP & Director of the ABA's Office of Insurance Advocacy, presented the views of the ABA and ABIA on the subject of flood insurance to the Climate Change and Global Warming Working Group of the National Association of Insurance Commissioners (NAIC) at their Summer meeting in Indianapolis, IN.
The presentation covered the reauthorization of the National Flood Insurance Program (NFIP) in 2012 and the effects of the Biggert-Waters amendment (BWA) on the affordability of flood insurance now that the law is being fully implemented. Biggert-Waters eliminates (or, in some cases, phases in the elimination of) various subsidies for flood insurance on properties located in FEMA-designated flood zones. The result will be significant increases in flood insurance premiums for certain property holders.
Robust discussions between Mr. McKechnie and the various insurance commissioners on the question of affordability occupied most of the time allotted for the meeting. Mississippi Insurance Commissioner Mike Cheney expressed concern about the impact of the new law on Mississippi residents whose homes are located in flood plains. Mr. McKechnie testified that while both the ABA and ABIA, are committed to moving to actuarial rates for flood insurance coverage under the NFIP, they also recognize that a greater transition period may be necessary to ensure continued affordability for thousands of middle-class and low-income homeowners and small businesses.
Mr. McKechnie described the association's position as in support of the market reforms BWA imposes but that bankers are sensitive to the affordability question. Accordingly, ABA and ABIA support efforts by Representative Bill Cassidy (R-LA) to delay implementation of BWA pending the results of an affordability study FEMA has been directed to conduct.
The NAIC has asked for regular briefings on this issue.
Read Kevin McKechnie's testimony.