Congress has passed a major spending bill that includes renewals of the National Flood Insurance Program (NFIP) and Terrorism Risk Insurance Act (TRIA). The bill was first passed by the US House of Representatives on December 17, 2019, before it was voted on and passed by the Senate on December 19, 2019, the eve of the NFIP’s expiration.
The bill renews the NFIP until September 30, 2020, and TRIA for an additional seven years. TRIA originally would have expired on December 31, 2020.
Members of the insurance industry from organizations such as the American Property Casualty Insurance Association (APCIA) and National Association of Mutual Insurance Companies (NAMIC) have applauded the TRIA extension.
“This is a great example of how Congress got their job done, on time, with the interest of the American people at the forefront,” said Nat Wienecke, Senior Vice President of Federal Government Relations for APCIA. “Because TRIA is critical to the stability of the nation’s economy, businesses of all sizes, and the insurance markets, Congress enacted the Program well before it was set to expire. This is a job well-done.”
The bill will now be sent to President Donald Trump, who is expected to sign the legislation and enact it into law.
State Rep. Eddie Lucio III, Chairman of the Texas House of Representatives Committee on Insurance, has announced a hearing for the committee to discuss its interim charge related to the Texas Windstorm Insurance Association (TWIA) and implementation of House Bill 1900. The hearing will be held January 15, 2020, in Rockport, Texas.
The Texas legislature passed HB 1900 at the end of the 86th legislative session in May 2019. It is meant to modify TWIA operations and funding practices to prevent perpetual rate increases for coastal residents and businesses.
The TWIA Actuarial and Underwriting Committee recommended a 5 percent rate increase for commercial and residential risks in November, but the association’s Board of Directors voted against the rate hike at a meeting on December 10, 2019. About 40 people, including elected officials, county judges, and city politicians, spoke against the increase during the meeting’s public comment period.
In November, several state legislators issued a letter to the TWIA board in opposition of the Actuarial and Underwriting Committee’s recommendation, stating that many in Hurricane Harvey-affected areas are still recovering from the catastrophe.
“We encourage you to look at other ways to achieve the goal of generating revenues to pay claims that will not put recovering communities at a disadvantage,” said the legislators in the letter.
The TWIA board voted during its meeting to assess member insurance companies $90 million based on losses from Hurricane Harvey, which must be approved by Insurance Commissioner Kent Sullivan. The board will defer further consideration of TWIA rates until its next statutorily required rate filing in August 2020. TWIA’s next quarterly board meeting will be held in Austin in February 2020.
The National Flood Insurance Program (NFIP) was reauthorized for an additional month on November 21, 2019, the day it was set to expire. The program is now funded until December 20, 2019.
The extension was included in a larger government funding bill that will keep the government operational until a longer-term funding agreement can be made in Congress. The bill was presented to and signed by President Trump on November 21, 2019.
Several bills that would extend the NFIP for a longer period and introduce reforms to the program have been proposed by members of Congress. Members of the insurance industry have spoken out in support of a long-term extension of the NFIP, as some proposed bills would extend it for several years, but none have yet passed both chambers.
Despite the program undergoing multiple short-term extensions over the past two years, the Federal Emergency Management Agency (FEMA) notes that it has never failed to honor insurance contracts in place with NFIP policyholders. In the event that the NFIP lapses, FEMA would still have authority to ensure that claims are paid, though new and renewal policies would not be sold until the NFIP was re-funded.
A bill that would extend the Terrorism Risk Insurance Act (TRIA) for an additional seven years has been passed by the US House of Representatives with a vote of 385-22. The TRIA program was first created following the terrorist attacks of September 11, 2001, and has been reauthorized three times since in 2005, 2007, and 2015.
The reauthorization bill was first introduced in the House on October 11, 2019, and was referred to the House Committee on Financial Services, which introduced and passed an amended version.
A companion bill was introduced in the US Senate on November 14, 2019, and is scheduled for a hearing by the Senate Banking, Housing, and Urban Affairs Committee on November 20, 2019.
The National Association of Professional Insurance Agents (PIA National) has issued a statement in support of the bill’s passage.
“The House passage of TRIA over a year in advance of its expiration is a breath of fresh air and will be welcomed by policyholders and the market,” said Jon Gentile, PIA National Vice President of Government Relations.
Without the extension, the TRIA program would expire on December 31, 2020.
The US House Financial Services Committee unanimously voted to pass an amended version of the Terrorism Risk Insurance Program Reauthorization Act of 2019 on Thursday, October 31, 2019, which would extend the Terrorism Risk Insurance Act of 2002 (TRIA).
The amended bill will require a report by the U.S. Government Accountability Office on cyber terrorism risks and Treasury reporting with disaggregated data on places of worship. The amendment also extends the bill for seven years instead of the originally proposed 10 years.
The American Property Casualty Insurance Association (APCIA) has spoken out in support of the bill’s passage.
“We applaud Chairwoman Waters, Ranking Member McHenry, and the House Financial Services Committee for making TRIA reauthorization a top priority,” ACPIA said in a statement. “The risk of terrorism is still very real, and the TRIA program is still needed to promote economic stability both before and after an attack. We urge the full House to take up and pass this bill quickly.”
TRIA in its current form will expire in December 2020. The extension bill will next be recommended for consideration by the full US House.
Congresswoman Maxine Waters has introduced a bill in the US House of Representatives to reauthorize the Terrorism Risk Insurance Act (TRIA) until December 2030. The act is currently scheduled to expire on December 31, 2020.
The bill, H.R. 4634, was introduced on October 11, 2019, and was considered by the Housing, Community Development, and Insurance Subcommittee, a part of the US House Committee on Financial Services, on October 16, 2019.
TRIA was enacted following the September 11, 2001, terrorist attacks in the US. The bill created a federal backstop for terrorism insurance to keep coverage affordable in the event of another attack. The act has been reformed over time so that the private sector would bear 100% of the losses if another terrorist event like September 11 occurred.
“Nearly two decades after TRIA was enacted, TRIA has thankfully never been triggered, and the program is working as intended, effectively protecting our economy from the costs of a terrorist attack and providing security for many of our nation’s hospitals, stadiums, schools and small businesses,” said Waters, Chairwoman of the House Financial Services Committee.
The bill is sponsored by 27 other representatives and is supported by more than 300 organizations, including the American Property Casualty Insurance Association (APCIA).
“We applaud Chairwoman Waters for introducing a bipartisan bill that would reauthorize TRIA for ten years in its current form,” said David Sampson, president and CEO of the APCIA, in a statement. “We urge Congress to take up and pass H.R. 4634 as soon as possible.”
Following its subcommittee hearing, Waters said that she intends to move forward with full committee consideration of the bill at a markup in October before working to bring it to the floor.
A law passed unanimously by the Texas Legislature regarding continuing education requirements for insurance adjusters will take effect on September 1, 2019.
SB 1584 provides that the Texas Department of Insurance (TDI) will accept claims certifications that the adjuster receives during a license period for continuing education credit if:
- The claims certification is issued by a national or state claims association with a certification program;
- The number of hours required to complete the certification program is not less than the number of hours of continuing education that an adjuster is required to complete during the license period;
- The content of the certification program includes:
- Content required under Texas law, and
- Is made available through an electronic portal maintained by the association for review and audit by TDI;
- The association is approved by TDI as a continuing education provider;
- The association reports the adjuster’s completion of the certification program to TDI through an electronic portal maintained by the department; and
- The association provides TDI access to the adjuster’s transcript showing the adjuster’s completion of the certification program.
Though the law takes effect in September 2019, it applies to continuing education requirements for an insurance adjuster’s license period beginning on or after January 1, 2020. More information about continuing education requirements can be found on the TDI website.
A bill that will allow eligible surplus lines insurers to provide windstorm and hail insurance, notwithstanding available coverage through the Texas Windstorm Insurance Association (TWIA), has passed into law in Texas, effective June 14, 2019. Under the law, a diligent effort will still be required, but available TWIA coverage will not limit the amount of insurance that can be procured in the surplus lines market.
HB 1940 easily passed both the Texas House of Representatives and Texas Senate during the 86th legislative session before it was sent to Gov. Greg Abbott on May 24, 2019. Gov. Abbott signed the bill on June 14, 2019, and it became law.
The bill amends Texas Insurance Code, Chapter 981, Section 981.004, related to authorized surplus lines coverage. The bill became effective immediately as it received at least two-thirds votes from members of each legislative chamber and was signed by the Governor on June 14, 2019.
Rep. Eddie Lucio III, sponsor of the bill, has noted that there is confusion in the market as to whether surplus lines insurers may lawfully provide coverage to those in TWIA’s coverage area. With HB 1940’s passage, it is clear that eligible surplus lines insurers may provide insurance to these consumers, without regard to the availability of TWIA coverage. This may expand windstorm and hail insurance coverage in the state and lead to increased options for Texas insureds.
A bill passed by the Texas Legislature this session that creates a diligent effort exemption for flood insurance policies in the surplus lines market has been signed by Gov. Greg Abbott. The bill, HB 1306, will take effect September 1, 2019, for any new or renewal policies issued on or after January 1, 2020. A diligent effort will still be required of agents for flood insurance policies whose policy period begins before January 1, 2020.
Under the new law, surplus lines agents are not required to conduct a diligent effort search to obtain flood insurance through the admitted market before placing it in the surplus lines market. However, the law does require that the eligible surplus lines insurer issuing the coverage has a financial strength rating of A- or better from the A. M. Best Company.
During the 86th legislative session, the bill was passed easily by both the Texas House of Representatives and the Texas Senate. The goal of the new law is to expand access to flood insurance in the private market, which offers alternatives to the National Flood Insurance Program.
A bill to improve flood insurance affordability has been introduced in Congress by Congressmen David Scott and Sean Duffy, of Georgia and Wisconsin, respectively. H.R. 3146, or the Fair Flood Insurance Act, would provide consumers with the option to pay flood insurance premiums monthly instead of as a single large payment.
Scott and Duffy both serve as members of the House Financial Services Committee, which has jurisdiction over insurance matters. The bill was first introduced on June 5, 2019, and has not yet been considered by committee, nor the House or Senate as a whole.
“My legislation is designed to ease the financial barriers many homeowners face when purchasing necessary flood insurance to protect their homes,” Scott said. “While we don’t know when the next storm will hit, we must ensure that homeowners and renters do not drown in the financial aftermath. The Fair Flood Insurance Act will make insurance more affordable and financially empower consumers to protect their homes and families.”