Passage of Insurance-Related Bills Problematic with Sept. 26 Adjournment Looming
WASHINGTON, D.C. — Congress is going to have its hands full when it returns to work next week for an abbreviated pre-election session, making it that much more difficult to get any definitive action on a plethora of insurance-related bills, industry lobbyists say.
Indeed, Congress will have just 15 business days to deal with a host of issues — insurance and otherwise — before adjourning for what it hopes will be the end of its current two-year term by Sept. 26.
The most pressing insurance issue is to reauthorize the National Flood Insurance Program before it expires when the federal fiscal year ends on Sept. 30.
The problem, however, is that the House (H.R. 3121) and Senate (S. 2284) have passed substantially different versions of the Flood Insurance Reform and Modernization Act, with the biggest difference being the House bill’s inclusion of wind coverage. The Senate, unlike the House, has not yet even selected conferees who would work with their House counterparts to resolve the substantial differences.
"The Sept. 30 deadline for extending the National Flood Insurance Program is close, but we’re hopeful the House and the Senate will be able to reach a sound resolution — one that does not add wind coverage to the program," said Dennis Kelly, a representative for the American Insurance Association.
Adding wind as a covered peril to the NFIP is "unnecessary, and would drive the $ 18 billion, debt-ridden program further into the red," agreed Nancy Grover, a representative for the National Association of Mutual Insurance Companies.
Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, called reauthorization of the NFIP "the first and foremost" insurance item on the congressional agenda this month.
Second, Congress may establish hands-on federal involvement in insurance regulation through passage of H.R. 5840, the Insurance Information Act, creating an Office of Insurance Information within the Treasury Department to advise the federal government on industry issues and take the point on global insurance trade issues.
In a separate initiative, passage of legislation — S. 929 in the Senate and H.R. 1065 in the House — establishing federal standards for regulation of surplus lines and reinsurance has a 50-50 chance of passage, according to industry lobbyists.
Joel Wood, senior vice president of government affairs for the Council of Insurance Agents and Brokers, said enactment of the Nonadmitted and Reinsurance Reform Act is "our biggest consideration, and our members are actively letting all their U.S. senators know how important it is to get this legislation to the finish line."
In addition, at least the House is expected to act on the National Association of Registered Agents and Brokers Reform Act, H.R. 5611, which would establish a nationwide, nonprofit corporation to handle multistate producer licensing.
Meanwhile, the likelihood of action is less clear with the Increasing Insurance Coverage Options for Consumers Act, H.R. 5792, which would allow risk retention groups to provide property as well as liability insurance.
The legislation creating an Office of Insurance Information may be taken up by the full House relatively soon after Congress returns, according to industry lobbyists.
Action was delayed after a new California member, Rep. Jackie Spier, a Democrat, voiced concerns about whether the bill would inadvertently preempt Proposition 103 — the 1988 ballot initiative that mandated a prior-approval auto insurance rating system for California, and which ended up rolling back auto rates.
Harvey Rosenfeld — one of the chief supporters of Prop. 103, now president of Consumer Watchdog, based in Los Angeles — said he has also voiced concerns about the bill to House and Financial Services Committee leaders because of the bill’s potential impact on Prop 103.
"Our grave concern is that in the form that would have been taken to the House floor in late July, it would authorize a preemption of voter-approved regulation of insurance in California and regulation in other states," he said. "The bill contains a lot of procedures that apparently were intended to protect against unfair or improper preemption, but they were not in our view effective in preventing preemption that is unjustified."
He said he is still in talks with committee officials about his concerns, but would not comment further.
The National Association of Insurance Commissioners discussed the issue at a meeting several weeks ago in Chicago, with state regulators saying they are working with staffers at the House Financial Services Committee on language acceptable to the commissioners.
NAIC’s president-elect, New Hampshire Insurance Commissioner Roger Sevigny, said his group is coordinating with committee staffers on language that defines an agreement in H.R. 5840.
At the meeting, Mr. Sevigny reiterated the NAIC’s "vehement" opposition to an optional federal charter proposal, the National Insurance Act.
AIA’s Mr. Kelly said creating an Office of Insurance Information could "address the immediate need for insurance expertise at the federal level — an absolutely critical need, especially when it comes to international and federal policy matters. We would like to see Congress continue consideration of this important legislation."
Ms. Grover of NAMIC said that "a properly constructed and contained OII would assure information on the insurance industry is available to the federal government, and would provide a process for agreements on international trade."
NAMIC, which opposes creation of an OFC, said creating an OII "weakens the argument for an optional federal charter."
Overall, however, Mr. Wood cautions that getting legislation through in so short a time period is problematic. "People have to be realistic in a presidential election year," he said. "All the big-picture issues will be joined next year, not this year."
However, he noted, Sen. Chris Dodd, the Connecticut Democrat who chairs the Senate Banking Committee, "has clearly indicated that he’d like to knock a couple items off the list before the end of the year, including surplus lines reform and perhaps the Office of Insurance Information."
"That would be terrific," according to Mr. Wood, "as he has correctly identified the two issues on which there is fairly broad agreement and where Senate action would really improve matters."