The National Association of Professional Insurance Agents — PIA National — is opposed to the new flood insurance renewal bill, the 21st Century Flood Reform Act. It is a compromise engineered by House Financial Services Committee Chairman Jeb Hensarling and combines bills introduced earlier this year.
Jon Gentile, vice president of government relations for the PIA said the new bill has the same problem in it as those we’ve seen previously. That issue is agent compensation.
“PIA National opposes this legislation because it cuts the Write Your Own (WYO) reimbursement rate paid to insurance companies that participate in the National Flood Insurance Program (NFIP) by 3 percentage points. This cut was negotiated by trade groups and other representatives of insurance carriers without regard for the needs of consumers and agents, or the negative impact it will have on the flood insurance program and on disaster preparedness,” he said.
Gentile said carriers have made it clear that they will pass any reductions in WYO compensation onto independent agents. “Such cuts will force agents who currently sell flood insurance to leave the program, because it will become prohibitively expensive for agents to sell flood insurance, and it will discourage agents from entering the NFIP policy market. This will ultimately hurt consumers, just as cutting the agent out of the Affordable Care Act hurt consumers in their purchase of health insurance,” Gentile added.
Flood insurance reforms have been a battle for the last decade and Congress keeps kicking the proverbial can down the road. The PIA — Gentile said — wants reforms and wants the National Flood Insurance Program (NFIP) to be solvent. But PIA cannot and will not support this bill.
“In the aftermath of the devastation wrought by Hurricanes Harvey, Irma, and Maria, it is unconscionable that policymakers would include a provision making it less likely that homeowners will purchase flood insurance by undermining the NFIP’s sales force. It is unfortunate that consumers and agents are the only ones being asked to suffer the financial consequences of these programmatic changes, when they are arguably the groups that can least afford it.” Gentile said.
When there is a crisis like a hurricane or like the devastating wildfires in California, consumers — and insurance companies — benefit from the active participation of the independent insurance agent.
“Any cut to agent commissions will lead many independent agents currently selling NFIP polices to stop and dissuade prospective agents from doing so. This will result in a decrease in the number of properties protected by flood insurance, at a time when increasing the number of flood insurance policies in force should be a top public policy priority,” he said.
This bill — Gentile and PIA National contend — fails consumers big time.
“Without changes, this legislation in every way fails homeowners and businesses who rely on agents to guide them through the confusing flood insurance program and provide them with critical support in the days and weeks after a flooding event. PIA urges members of Congress to vote no on any cut to the WYO rate that does not include a strong and robust protection for agent compensation,” Gentile added.
Source links: PIA National, Insurance Business America, Insurance Journal