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ALERT - PIA Members Need to Act Now on Flood Insurance Policies

As we reported to PIA leadership Friday 11/22/02 in a special PIA Alert, the U.S. House of Representatives adjourned for the year on Friday without...
November 25, 2002

As we reported to PIA leadership Friday 11/22/02 in a special PIA Alert, the U.S. House of Representatives adjourned for the year on Friday without extending authorization for the National Flood Insurance Program (NFIP), slated to expire on December 31, 2002. NFIP is the program under which the federal government backs approximately 90 percent of the flood insurance policies in the nation.

PIA has been working with the Federal Insurance and Mitigation Administration (FIMA) since Friday to detail what can and should be done in terms of existing, renewal, endorsement changes and new business for NFIP. Please be advised of the following:

In essence, FIMA confirms the program technically ends 12-31-02. However, because a Continuing Resolution (CR) was adopted by Congress before adjourning for the year, all services for current contracts at current conditions will be honored, even if servicing needs extend into next year.

FIMA notice states that any and all requests accompanied by correct premiums for:

  • Flood Insurance Policy Renewals effective 01-01-03 and beyond;
  • Any endorsement changes to current policies continuing enforce beyond 12-31-02;
  • Any new policies requested to be effective 01-01-03 and beyond will be honored and issued -- if received BEFORE 12-31-02! 

Please remember that any current insured with a current flood policy that is changing property locations (i.e., is buying a new home and converting the current policy at mid-term to this new location and deleting the previous location) is considered a new policy!

What It Means to PIA Agents:  We recommend you contact each of your insurers/vendors through which you write flood insurance immediately, share this PIA alert, and FIMA's notice, and ask these questions:

  1. How will your insurer/vendor proceed in these matters?
  2. What role, if any does your insurer/vendor expect you, as agent, to play?
  3. Request the insurer/vendor be sure to copy you on all correspondence sent to your flood insurance policyholders on this matter.
  4. What will be your (insurer/vendor and agent) joint procedure with regard to renewals, endorsement changes and new policies that come to you, the agent, after the 12-31-02 deadlines?
  5. How does your insurer/vendor wish you together to handle premiums for this before 12-31-02 and after that date?
  6. What do you and your insurer/vendor do about any loss that may occur BEFORE Congressional reauthorization is complete and relates to material changes that were necessary to a current policy in force, but the change or request for change did not come to your attention BEFORE 12-31-02?
  7. Please have the insurer/vendor send all their instructions to you in writing and request then to also please copy and send these also to FIMA Administrator Anthony S. Lowe, as soon as possible.

PIA Continuing Action:  PIA will share these and other questions as they arise directly with FIMA and share their response. Further, we are working with carriers to better detail what the private sector can do regarding the processing of flood business. PIA is also working with Members of Congress to resolve this matter by seeing that Congress completes its task upon reconvening in January.  There will be more on this next week in PIA National Newsline, as well as the background that got us to this point.

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