Professional Insurance Agents Support Request to Raise the Borrowing Authority of Flood Insurance Program
Backs Obama Administration Call for $10 Billion Increase
WASHINGTON, Dec. 12, 2012 /PRNewswire-USNewswire/ -- The National Association of Professional Insurance Agents (PIA) supports a supplemental budget request submitted to Congress by the Obama administration calling for a 50 percent increase, to $30.4 billion, in the borrowing authority of the National Flood Insurance Program (NFIP) to accommodate losses from Tropical Cyclone Sandy.
The NFIP already carries a $17 billion debt from 2005's Hurricane Katrina, which was not addressed in reform legislation passed by Congress this year. The program is fast utilizing its remaining borrowing authority.
PIA notes that it is unfortunate that reforms to the NFIP as part of the Biggert-Waters Flood Insurance Reform Act of 2012 and signed into law July 6 by President Obama, designed to put the program on a more firm financial footing, didn't have time to kick in before Sandy struck. These reforms include eliminating premium subsidies and moving toward risk-based pricing.
"Since the NFIP's borrowing authority was raised to $20.775 billion following 2005's Hurricanes Katrina and Rita, NFIP claims have been managed with no requests for additional increases in borrowing authority," said PIA National President Andrew C. Harris, noting that apart from Katrina, the program has generated enough funds to pay ordinary claims. "It is unfortunate that the flood insurance program needs an extra infusion of funds as a result of the devastation of extraordinary catastrophes."
"Not paying valid claims is simply not an option," Harris said. "The federal government has both a legal obligation and a moral imperative to pay to indemnify policyholders for their covered flood losses in policies backed by the NFIP."
PIA serves on working groups formed by the Flood Insurance Producers National Committee (FIPNC) and the Institute for Business and Home Safety (IBHS) tasked with accomplishing as many of the reforms mandated by the Biggert-Waters Flood Insurance Reform Act of 2012 as possible for a January 1, 2013 start date.
"Unfortunately, Sandy did not wait for the flood insurance reforms to take full effect," said Richie Clements, PIA National's representative to the NFIP. "The additional burden on the federal budget will be hard to handle, but this is a matter of paying people what they are in fact owed under a valid insurance contract that is guaranteed by the federal government." Clements also serves on the FIPNC and IBHS working groups, along with PIA's immediate past FEMA/FIPNC representative M. Rita Hollada and PIA National Senior Vice President Patricia A. Borowski.
Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America (SM). PIA's web address is www.pianet.com.
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SOURCE National Association of Professional Insurance Agents