Agents say ‘no’ or nothing to adding wind coverage in flood program

Some independent insurance agents are taking a “neutral” position when it comes to adding in wind coverage in the National Flood Insurance Program (NFIP). Still others say “no” to wind entirely.

Patrick Royal of the Independent Insurance Agents and Brokers of America says his association remains “neutral,” neither supporting nor opposing adding wind coverage to the flood program.

But the Professional Insurance Agents agents seem to be pleased that H.R. 3121, the “Flood Insurance Reform and Modernization Act of 2007” is moving forward, but disagree on some of the “language” in the bill.

“PIA is pleased the flood proposal is moving forward,” said Patricia A. Borowski, PIA senior vice president. “However, we continue to be disappointed by and oppose the House’s inclusion of Rep. (Gene) Taylor’s language attaching a multi-peril (wind) coverage.”

Borowski said that if the NFIP added wind coverage to policies, in essence those policies would have to become comprehensive property policies.

“PIA understands, appreciates and agrees with the challenge that Rep. Taylor is trying to resolve for constituents, that is to be sure that people have coverage that will respond no matter whether the damage is from flood or wind or water surge, etc.,” she said. “However, the specific approach Rep. Taylor has selected and now is in the House version is highly defective and will not resolve the fundamental problem. It just adds more cost for insurance coverage for consumers and increases the number of parties and coverage forms that could be drawn into a claims coverage controversy.”

Borowski said the challenge with adding wind to flood policies is that most states do not exclude wind from private property policies.

“So, now you have a problem with a person with a flood policy with wind coverage, and a property policy with wind coverage,” she noted. And when there’s a flood “who pays?” she asked. “Whose limits pay? Who’s in control? Who makes the decisions?”

While Borowski added that PIA “absolutely understands Mr. Taylor’s position” this concern has to be worked out in a different way.

“Imposing wind in the NFIP truly is not a solution,” she said. “If this goes through we might be here three years later and have the same loss circumstance and those people who will have a flood policy with wind coverage, a property policy and a wind policy, will still be left short.”

Borowski added that the PIA is currently working with the Senate “to fix this problem aspect of the bill.”