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PIA National Calls for Swift Congressional Approval of Flood Insurance Funding Authorization

WASHINGTON, November 14, 2005 - The National Association of Professional Insurance Agents (PIA) is asking its members around the country to contact their...
November 14, 2005

Insurance Agents Group Conducts Grassroots Campaign, Says Federal Government Must Pay Policyholders in Federal Program

WASHINGTON, November 14, 2005  - The National Association of Professional Insurance Agents (PIA) is asking its members around the country to contact their members of Congress and urge them to extend the borrowing authority for the National Flood Insurance Program (NFIP).

Senate leaders have postponed until later this week at the earliest action on approval of an additional $5 billion line of credit extension for losses already incurred and a $24 billion credit extension for further anticipated costs in the nation's flood insurance program, administered by the Federal Emergency Management Agency (FEMA).

"The House has already acted on this critical request, but this delay in the Senate effectively places a hold on it and the full House still needs to act, meaning the NFIP cannot further extend their payouts and has issued a notice of this fact," said PIA National Senior Vice President Patricia A. Borowski.

"These requests for additional borrowing authority are critical and must be moved by leadership and adopted by Congress as swiftly as possible, to assure that the people already insured under the federal flood insurance program and who have claims pending from Hurricanes Katrina, Rita and Wilma and the floods in New Hampshire are paid," said Borowski. "This is not optional. This is about the federal government meeting its obligations and paying their current flood insurance policyholders the claims monies that they are due," Borowski said.

"It is not right to hold up these funding requests to make a point about FEMA's future," Borowski said, noting that flood program director David Maurstad has said the $5 billion will only cover claims through the Thanksgiving holiday.  "Because of these events, FEMA/NFIP was required on November 11 to advise that they have no further authority on their line-of-credit. This creates a situation of having to pay past claims out of current premiums."

"Congress should not adjourn for the Thanksgiving holidays without fulfilling its responsibilities to the victims of this year's floods who are insured under NFIP. If it fails to act, it will put these flood victims in harm's way again," Borowski said.

Long-Term NFIP Reforms

"We understand the sentiments of some Senators for making improvements in the flood insurance program," said PIA National Assistant Vice President of Federal Affairs Kellie Bray. "We look forward to working with Congress and the states on these improvements - following action by Congress to pay the claims that are now due."

PIA proposed a series of substantive reforms to the National Flood Insurance Program (NFIP) in testimony submitted to the Senate Committee on Banking, Housing, and Urban Affairs on October 18 and to a subcommittee of the House Financial Services Committee on October 20.

Among the recommendations by PIA National: an increase in building property insurance limit maximums; a system of automatic coverage for contents in non-commercial properties; adding or coordinating flood coverage for commercial policies in the area of business interruption insurance; to separate insurance under NFIP from post-disaster government assistance; and continued multi-year authorization of the flood program by Congress for its various authorities. 

Flood Insurance Producers Meeting

On November 7, the Flood Insurance Producers National Committee (FIPNC) met at PIA's offices to discuss NFIP reform proposals. Following the meeting, PIA member and FIPNC Chair M. Rita Hollada, CPCU, CIC, said the session was productive with FIPNC members embracing many of PIA's proposals. FIPNC acted to encourage each of its association members to speak publicly in support of its recommendations. PIA discussed proposed improvements to the flood program in an interview on CNN.

"Funding is not and has never been the complete or only answer," noted Hollada. "It is a part of the answer, even then only as a financial backstop, not a funding license to ignore critical mitigation issues. Including and coordinating local, state and federal governments is critical, because only all these entities together have the exclusive authorities needed to establish and enforce capital infrastructure, enact land-use regulations, construct adequate levy systems and formulate private land and building requirements. Without these firmly in place, updated and enforced, it will always be nothing more than a larger money loss."

Founded in 1931, PIA is a national trade association which 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 will celebrate its 75th anniversary in 2006.