You would never know insurance is a state-regulated business, given the enormous amount of attention paid to the property-casualty industry in Congress during 2007. But despite last month’s extension of the Terrorism Risk Insurance Act, and the fading political fallout over 2005 hurricane losses, Washington is expected to debate a number of topics crucial to carriers and producers in the year ahead.
One of the biggest agenda items is renewal of the National Flood Insurance Program, due to expire Sept. 30, with insurers opposed to adding optional wind coverage.
In addition, there remains strong support among industry groups for legislation streamlining regulation of the surplus lines and reinsurance sectors. Indeed, trade groups believe this bill has a strong chance of becoming law, even with the abbreviated schedule Congress will likely undertake in a presidential election year.
The most controversial agenda item is the continuing debate over creation of an optional federal charter—an issue that has split the industry. One recent development is the surprising support of the Independent Insurance Agents and Brokers of America for a national licensing option for producers.
The industry also might not be let off the hook when it comes to how claimants hit by both wind and water-related losses were treated after Hurricane Katrina, with more than a dozen bills addressing insurer operations still hanging around—including repeal of the McCarran-Ferguson Act’s federal antitrust exemption.
One champion of the punitive measures—Sen. Trent Lott, R-Miss.—left Congress before year’s end, however, perhaps taking some of the heat off insurers.
There also will be further debate about expansion of terrorism coverage under TRIA, including calls for inclusion of nuclear, biological, chemical and radiological attacks.
But while studies are scheduled and hearings anticipated, no legislative action is expected—not with President George W. Bush and congressional Republicans determined to keep the federal terrorism reinsurance backstop as modest as possible.
Less controversial is industry support for federal legislation mandating the upgrading of state building codes to mitigate against the effects of future hurricane activity.
CAT COVERS
David Sampson, president and chief executive officer of the Property Casualty Insurers Association of America, spoke for the industry when he noted the “urgency” of the NFIP’s renewal.
Different legislation is coming out of the House and Senate, with the industry opposed to the House bill—H.R. 3121—“because it contains a provision that would add wind coverage to the NFIP,” Mr. Sampson noted. “While the inclusion of wind coverage…is well-intentioned, it may produce unintended negative consequences for millions of American insurance consumers.”