Report from the NCOIL meeting
On July 10, 2019, NOAA published an article titled 2018 State of High Tide Flooding and 2019 Outlook. Also on the same day, the National Association of Insurance Commissioners (NAIC) released its 21-page research document that captured what many states are/are not doing in the private flood insurance space and stressing the need for data as policymakers deliberate how the market should emerge.
Both of these documents were timely as they coincided with a meeting the following day of the National Council of Insurance Legislators (NCOIL) in California. As we reported in our July 1 edition (Private Flood Insurance Gets Boost), NCOIL’s Special Committee on Natural Disaster Recovery has been tasked with moving the ball forward to adopt a simple 3 page private flood insurance model bill. Florida’s very own legislator David Santiago, Representative from Volusia County, is sponsoring this model bill draft along with a small group of us advising him along the way.
The draft has 5 easy to follow sections: prior form approval; unregulated rates; mandatory agent education of their customers; insurance commissioner notification if a company wants to enter a state’s flood market; and insurance commissioner certification of the policy form that it meets or exceeds NFIP coverage. This just makes sense to ease the way for a vibrant private flood market in all 50 states.
What was so very puzzling was that members of the insurance industry and those that represent insurance agents oppose the model bill!! The insurance industry representatives contend that no guidelines are needed in each state’s statutes and the agent lobbyist wants to remove the entire section that would require agents to have a conversation with their customers, calling the section “well intentioned” but a “burden” on agents.
Luckily, common sense prevailed with LMA inviting an insurance agent that is the chief underwriter of a private flood insurance company to speak. This agent said the language requiring agents to educate their consumers was not a “burden” but a responsibility. He also encouraged NCOIL decision-makers to move ahead with the proposed bill because of the uncertainty among state regulators who don’t have a path forward when private flood policy forms are presented. He said the inconsistency and uncertainty could be eliminated if states had ground rules like those proposed. And in fact, the National Association of Realtors (NAR) released their state by state research showing regulatory decisions were not consistent.
After an hour of debate, NCOIL’s President, Louisiana Senator Dan “Blade” Morrish closed the meeting with a bold statement that focused on the white elephant in the room. He very directly pointed out that the opponents in the room “wanted to” sell private flood insurance but didn’t want any of the consumer protections afforded by the draft bill. Ya think?? The measure will be taken up for further consideration at NCOIL’s winter meeting in Austin, December 10-12.
LMA Newsletter of 7-15-19