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Round and round she goes, but where NFIP ends up, nobody knows

The time has come, it seems, to talk of flood insurance rate hike delays, of months or years and agent licensing and economically distressed policyholders -- and, as Lewis Carroll would add, whether pigs have wings. The debate over the rate hikes associated with implementation of the Biggert-Waters Flood Insurance Reform Act continues in both the House and the Senate, and the White House has chimed in as well.

Whenever someone asks us to explain the path of National Flood Insurance Program reform bills, we pull out our Spirograph and a Sharpie. From the center of the diagram, a series of circles and loops take shape, sometimes forming sets and subsets, but always turning back on themselves. For every new proposal, there is a counterproposal that reaches just as far, and resolution seems impossible. (A friend of ours suggested that all of the paths converge in the center, in a large black hole. We prefer a more positive outlook.)

Last week, the Senate took a bold step in its effort to reform flood insurance reform. Lawmakers packaged the Homeowner Flood Insurance Availability Act and the National Association of Registered Agents and Brokers Reform Act into one bill. "Pass both or pass neither" is the clear message to the House.

It's a gamble. The NARAB bill has already received House support -- a similar bill passed last September -- but the flood insurance fix has consistently met with resistance from House leadership.

The flood insurance bill would postpone the Biggert-Waters hikes for four years. Congress approved and the president signed a short-term fix earlier this month that had been wrapped into a large spending bill. That fix, however, was an eight-month delay for some policyholders. The Homeowner Flood Insurance Availability Act would delay rate increases for as long as four years and would affect many more homeowners.

We'll get into the details of the bills, including NARAB, in our next post.

Source: Insurance Journal, "Senate Links Agent Licensing Reform with Flood Insurance Delay," Andrew G. Simpson, Jan. 21, 2014

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