Earlier this week, the Big “I” testified before the U.S. House of Representatives Committee on Financial Services Subcommittee on Housing and Insurance at a hearing entitled “Opportunities and Challenges Facing the National Flood Insurance Program.”

Chris Heidrick, principal of Heidrick & Company Insurance and Risk Management Services in Sanibel, Florida, testified on behalf of the association. Heidrick currently serves as chair of the Big “I” Flood Insurance Task Force.

The Big “I” was the only agent/broker group to testify at the first in a series of two hearings focused on the NFIP and efforts to reform and reauthorize the program before its expiration.

The association’s testimony focused on the NFIP’s critical role in today’s economy; the important responsibilities agents bear in servicing NFIP policies; the need for consistency and certainty within the program; and the prospects for more private market involvement in the sale of flood insurance.

The Big “I” strongly supports the NFIP, but also recognizes that the program may undergo some reforms during the next reauthorization. The program is scheduled to expire in September 2017. During the hearing, Blaine Luetkemeyer (R-Missouri), subcommittee chairman, indicated that work on the reauthorization bill will begin soon to help ensure the bill is passed before the program expires. The Big “I” agrees that reauthorization of the NFIP in advance of its expiration is necessary to provide certainty to the marketplace. The association is also actively urging Congress to carefully analyze any potential changes to the program to ensure they will not negatively impact policy take-up rates and retention levels. A broader, more diverse program base will help stabilize the NFIP.

At the hearing, the Big “I” reminded Congress that agents play an essential role in the delivery of flood insurance through the WYO program. The Big “I” explained how agents are uniquely trained and knowledgeable about NFIP details. Agents also ensure that consumers understand the product they are purchasing, whether out of necessity due to the mandatory purchase requirement or by choice.

The association also testified that it supports allowing the private market, where possible and practical, to offer flood insurance as a complement to the NFIP, provided that the policies are properly regulated. Consequently, the Big “I” supports H.R. 2901, the “Flood Insurance Market Parity and Modernization Act,” by Reps. Dennis Ross (R-Florida) and Patrick Murphy (D-Florida). This bill clarifies that a private flood insurance policy can satisfy the mandatory purchase requirement for flood insurance under the NFIP terms. Of greatest importance to Big “I” members, language in this bill ensures that policyholders can move seamlessly between the private market and the NFIP without losing their grandfathered rate simply for obtaining a private flood insurance policy.

However, the Big “I” continued to point out that the NFIP is virtually the only way for many people to protect against the loss of their homes and businesses due to flood damage, and any private market reforms in the next reauthorization should focus on increasing participation in the program to strengthen its base and diversify risk.

It is significant to note that the witness panel agreed unanimously at the first hearing when Emanuel Cleaver (D-Missouri), ranking member, asked if they agreed that today’s marketplace still needs a strong NFIP. According to testimony from Wright National Flood Insurance Company, despite the growth of a primary flood insurance market, the need for a strong NFIP still remains. But members of Congress from both sides of the aisle also expressed widespread sentiment at the first hearing that the private market could, and should, play a larger role in the future. 

The second hearing in the series, entitled “How to Create a More Robust and Private Flood Insurance Marketplace,” took a closer look at that potential role and the pros and cons of greater private market involvement in the NFIP. Significant discussion addressed the improvements private insurers can provide to the NFIP to enhance the program, such as more accurate maps and models to predict flooding in certain parts of the country.  

The hearings made clear that a review of the NFIP will be one of the top priorities for the House Financial Services Committee in 2016, and the Big “I” will continue to be the voice of independent agents and brokers in regards to the program and any reforms Congress may make as part of the NFIP’s reauthorization.

Flood insurance will be a major focus of the Big “I” Legislative Conference, to take place April 13-15 in Washington, D.C. Registration is open for this one-of-a-kind event that gives agents the opportunity to help protect the industry and their clients.

Jen McPhillips is Big “I” assistant vice president of federal government affairs.