[StBernard] Landrieu Amendment Restores Flood Insurance Accountability; Underlying Bill Still Shifts Heavy Burden to La.

[Westley Annis]

Landrieu Amendment Restores Flood Insurance Accountability; Underlying Bill
Still Shifts Heavy Burden to La.

 

WASHINGTON - The United States Senate today passed a bill to reauthorize the
National Flood Insurance Program (NFIP) with an amendment included by
Senator Mary Landrieu, D-La., to ensure insurance companies are held
accountable for the NFIP policies they market, sell and service.

"The Government Accountability Office recently highlighted the inherent
conflict of interest that exists when private insurers evaluate wind damage
versus flood damage, the latter of which the NFIP is responsible for," Sen.
Landrieu said. "This language will help reverse the trend of insurance
companies pushing wind losses onto the taxpayer, and insurance companies
will instead be better supervised and held accountable.

"The overall bill, however, places a great burden on Louisianians, many of
whom live in coastal communities. I will push the conference committee to
include my amendment in the final bill. However, I hope the compromise that
results will more closely mirror the House of Representatives' version,
which protects our homeowners and businesses against drastic rate
increases."

While the Senate bill wipes away the $17.5 billion debt of the NFIP,
Louisiana homeowners and businesses are left shouldering the bulk of the
burden for its cost. As a result, Sen. Landrieu voted against the Senate
bill today. It lacked provisions that she and other Gulf Coast senators
pushed for, including wind coverage and an increase in coverage limits, and
it requires the purchase of flood insurance for anyone who lives behind a
levee, dam or flood wall. The version that passed the House of
Representatives is much more favorable to Louisiana on these issues. The
House and Senate will negotiate the different versions of the bill before it
is sent back to each chamber for a final vote and then to the President's
desk.

The Landrieu amendment strengthens the responsibilities of the Office of the
Flood Insurance Advocate, a customer service office that was created by the
underlying bill. In addition to customer complaints, the amendment entrusts
the flood insurance advocate with the investigation of potential instances
of fraud and abuse. The advocate will conduct audits to ensure that only
flood losses are allocated to the NFIP, and to ensure that the "Write-Your
Own" (WYO) insurers are negotiating on behalf of the NFIP in good faith.
Additional examinations will also seek to protect the program's financial
integrity and to prevent fraud, abuse and conflicts of interest. The
advocate will refer criminal violations to the Department of Justice (DOJ). 

The advocate will develop penalties for improper conduct or for failing to
cooperate in an investigation. Penalties may be monetary, but they can also
result in suspension or removal of WYO insurers from the NFIP. 

Only the President or the FEMA Administrator will have the power to remove
the advocate, and should they do so, the amendment requires that they
provide an explanation to Congress within 15 days. The advocate must have a
background in representing policyholders and experience conducting
investigations and audits, and the FEMA Administrator will not be able to
prevent the advocate from initiating an investigation.

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