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Congress Back in Session, But Not for Long

When most Americans come back to work after Labor Day, they know that they have four more months of work before the end of the...
September 5, 2006

When most Americans come back to work after Labor Day, they know that they have four more months of work before the end of the year. But for Members of Congress every two years, the work of legislating is interrupted by the work of getting re-elected. Congress officially resumes work on September 5, but is tentatively scheduled to adjourn by September 29 to enable members to campaign. That leaves a scant 19 days for legislative activities.

Several insurance-related issues are before Congress right now, but the compressed schedule may squeeze action into either a lame-duck session after the election or 2007. Here's what's pending:

NFIP Funding & Reform:  The House has passed a flood insurance reform bill. In the Senate, a different bill passed the Senate Banking Committee, but hasn't made it to the floor. On funding, FEMA officials have indicated there is enough borrowing authority in place to carry through the end of the year. But NFIP administrators want authority increased to $25 billion from the current $21.8 billion. Without the urgency of needing to increase funding right away, the whole issue of flood funding and reform may get kicked down the road.

A Small Bite of SMART:  It is conceivable that the House could take action on the Nonadmitted and Reinsurance Reform Act (H.R. 5637) that was introduced in June by Reps. Ginny Brown-Waite (R-Fla.) and Dennis Moore (D-Kansas). The bill would establish a uniform system of premium tax allocation and collection for surplus lines, bar states from asserting the extraterritorial application of their laws and places regulatory authority over nonadmitted or out-of-state insurers with an insured's home state.

This surplus lines legislation was served up to be a smaller, more palatable alternative to SMART, the expansive State Modernization and Regulatory Transparency Act which languished in the discussion stage for two years. Now, the effort to impose federal standards on state insurance regulation centers on dividing SMART's 17 sections, or titles, into smaller parts to move it through the legislative process. The surplus lines bill is first out of the box. There may not be time on the legislative calendar for action on H.R. 5637 this year. A companion bill has yet to be introduced in the Senate.

Optional Federal Charter:  This is the bill (S. 2509) that PIA has been working to defeat since the day it was introduced back in April. Supporters of the National Insurance Act of 2006 have encountered vehement opposition led by PIA. In addition, the National Conference of Insurance Legislators (NCOIL), the National Conference of State Legislators (NCSL) and the National Governors Association (NGA) are all strongly opposed to S. 2509. Fortunately, it is highly unlikely that even another hearing on S. 2509 will be held until next year.

Another Katrina Hearing Possible:  We're hearing some rumblings that Rep. Richard Baker (R-La.), the chairman of the Capital Markets Subcommittee of the House Financial Services Committee, may schedule a hearing this month on the availability of homeowners insurance in the Gulf Coast states a year after Hurricanes Katrina and Rita. Nothing has been firmed up yet.

The Election as Wild Card: Those who delight in speculating about the possible effect of politics on insurance legislation (that is, everyone in the industry) have another aspect to plug into their calculations this year: the possibility that the Democrats could capture control of the House, or even both the House and the Senate.

If that scenario were to play out, it just multiplies the current uncertainty. For example, it is generally assumed that Democrats are less adverse to federal regulation of insurance than Republicans; but maybe not. Two Democrats PIA has met with in the past few months, Sen. Ben Nelson (D-Neb.) and Rep. Earl Pomeroy (D-N.D), share opposition to federalization of insurance regulation with a Republican we've also met with, Sen. Jim Bunning (R-Ky.). However, another Republican, Sen. John Sununu (R-N.H.), is the prime author of the National Insurance Act of 2006, which would enable optional federal charters. Two years from now, the prospect of a Democrat in the White House raises yet another possibility: that Eliot Spitzer could become the Attorney General of the United States.

To be remembered, too, is the fact that while insurance issues are fascinating to those of us in the industry, they usually take a back seat to many others, especially in hotly contested elections like this one. Only when consumers have complaints does the topic of insurance rise to the level of a national discussion, and then the focus is on such things as claims or availability. Congress still has a tendency to concentrate on immediate action, as opposed to long term solutions or structural reforms. Sometimes this can be bad, if it prevents needed action until the last minute, such as providing funding to pay NFIP claims or renewal of TRIA. But sometimes it can be good, if bad ideas like optional federal charters never get off the ground.