BIG “I” SUBMITS IDEAS TO REFORM FLOOD INSURANCE PROGRAM
Association submits testimony to House Financial Services Committee
WASHINGTON, D.C., April 14, 2005—The Independent Insurance Agents & Brokers of America (the Big “I”) today submitted testimony to the House Financial Services Committee on ways to reform the National Flood Insurance Program (NFIP).
The Big “I,” the nation’s largest insurance association, supported the National Flood Insurance Act (NFIA) of 2004, but today expressed concerns that certain areas of reform were not addressed in the law, which reauthorized the NFIP for five years.
The first principle the Big “I” suggested should be addressed is a requirement for mandatory disclosures by the Federal Emergency Management Agency (FEMA) of flood information prior to any property purchase, with the creation of an accessible electronic database of flood losses.
“Buying a home is one of the most important investments an individual or family will make in a lifetime,” says Charles E. Symington Jr., Big “I” senior vice president of government affairs and federal relations. “Our association and its 300,000 members strongly believe it is incumbent upon FEMA to ensure that property-buyers are given the right tools to protect themselves, prior to purchase, against any unexpected consequences.”
Second, the Big “I” believes there is a need for strengthened NFIP building regulations. Stronger regulations would require communities to ensure that new construction in flood plains includes safeguards against flood damage and that substantial improvements be made to existing buildings within flood plains.
“Experience has shown that reasonable, common-sense building regulations work,” says Patrick O’Brien, Big “I” director of federal government affairs. “Structures that have been built to NFIP construction standards are as much as four times less likely to suffer flood losses, and this is good for both property owners and insurers.”
Additionally, the Big “I” suggested a proposed FEMA rule designating independent property-and-casualty agents as “agents of insureds,” rather than allowing the private sector to make this determination could be detrimental to some agents, brokers and consumers.
“Essentially this proposed change would shield private insurers from liability for their own errors, which would leave agents and brokers holding the bag for errors that may not be their fault,” O’Brien says. “This would increase their liability exposure and cost of doing business by making it more difficult to secure errors-and-omissions coverage or increasing premiums for their businesses. These increased costs have to be accounted for someplace in the system, and we know it is the consumer who many times ultimately loses.”
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.
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