You are here:HomeNews CenterInsurance News2007The New Year Brings Back Old Issues

The New Year Brings Back Old Issues

The New Year begins in a different way in 2007. A political earthquake has changed the makeup of Congress and opened up a new...
January 20, 2007

By Kellie Bray
Assistant Vice President, Federal Affairs
PIA National

The New Year begins in a different way in 2007. A political earthquake has changed the makeup of Congress and opened up a new fault line that runs between Capitol Hill and the White House. But while the landscape has shifted and many of the players have changed, the legislative challenges for professional insurance agents remain essentially the same.

In 2007, PIA National remains committed to opposing any move toward an optional federal charter for insurance, adamant in the enactment of permanent solutions for terrorism insurance and dedicated to identifying positive solutions to insuring for natural catastrophes and flooding disasters.

Continued Opposition to Federal Regulation

PIA will remain steadfast during 2007 in its opposition to proposals to federalize insurance regulation through a federal optional charter. Supporters of optional federal charters admit that passage this year is not likely; one characterized the work for 2007 as "a case of moving the debate downfield."

Opposing federal regulation will be the focus of grassroots efforts by PIA members during 2007. PIA welcomes the debate on insurance regulatory reform in Congress. But let there be no doubt: PIA actively supports the current state-based system of insurance regulation and believes that needed reforms must be done at the state level. PIA believes that Congress should not impose itself on insurance regulation.

Prospects Brighter for TRIA in New Year

With the new Democratic-led Congress taking office, the prospects for enacting a permanent solution for insuring against terrorism attacks have brightened considerably. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) has said that he wants to move quickly to enact a permanent terrorism insurance solution. On the House side, incoming Financial Services Committee Chairman Barney Frank (D-Mass.) has indicated a willingness to consider a five- to eight-year extension as well as expanding the program to include more lines of coverage and strengthening consumer protections. Ironically, a TRIA solution along the lines of the one crafted by retiring House Financial Services Committee Chairman Mike Oxley (R-Ohio) and Capital Markets Subcommittee Ranking Member Richard Baker (R-La.), which was torpedoed last year by the Bush Administration, could now re-emerge.
 
PIA continues to support a long-term solution for insuring against terrorism risks. PIA believes that action is needed to assure that terrorism coverage continues to be available and affordable for the customers of PIA agencies who need it. The Terrorism Risk Insurance Act, which was renewed for two years in 2005, is set to expire in December 2007.

Natural Catastrophes Still in the Spotlight

Although the nation made it through 2006 with no major natural catastrophes, the spotlight is still on Congress and state governments to ensure safety and economic security in the event of future natural catastrophes.  The United States Senate and House of Representatives as well as the National Association of Insurance Commissioners, National Conference of Insurance Legislators and state houses around the country will be working to establish possible solutions and best practices for dealing with disasters.

PIA supports legislative and regulatory changes that result in better success of federal, state and municipal governments' response to natural disasters.  We will continue to work with states and the private sector insurance industry to support open and stabilized insurance markets in all affected areas.  We believe solutions must maintain the solvency of participating states and insurers affected by catastrophic natural disaster events.

Flood Insurance Examined

The National Flood Insurance Program (NFIP) has seen increased scrutiny since Hurricane Isabel hit the East coast in 2003.  The devastation of the numerous hurricanes hitting Florida in 2004, followed by Hurricanes Katrina, Rita and Wilma in 2005, continued the desire of Congress to reform the National Flood Insurance Program.  It is likely the plans for dramatic reform will be ever present in 2007 as well.

PIA is encouraged by efforts of the House Financial Services and Senate Banking committees to reform the program to make it a more clear and efficient program for agents and consumers.  We likewise support improvements for FEMA emergency response and mitigation.

Aside from better prospects for passage of TRIA, the legislative status of the other issues of prime focus for PIA remain essentially the same, with an important caveat: the recent publicity surrounding claims handling in the wake of Hurricane Katrina may give added impetus to those in Congress who want to eliminate the insurance industry's limited antitrust exemption under the McCarran-Ferguson Act.

Still, the complexity of these issues and the overriding foucs among some in Congress on issues relating to the war in Iraq - and the other priorities outlined by the Democrats - may mean that insurance issues will see hearings being held, but bills not passed. And if they would be bad bills from the perspective of PIA members, no action will be good news.

Kellie Bray kelliebr@pianet.org is Assistant Vice President of Federal Affairs for PIA National.

PIA Connection

This article originally appeared in the January 2007 PIA Connection.