WASHINGTON - The Property Casualty Insurers Association of America (PCI) opposes the inclusion of language from H.R. 920, the Multiple Peril Insurance Act, within a larger flood reform bill, H.R. 3121, which passed the House of Representatives Thursday.

PCI believes that, while the inclusion of wind coverage within the National Flood Insurance Program (NFIP) is well-intentioned, it may produce unintended negative consequences for millions of American insurance consumers.  The association reiterates its support for a comprehensive public policy solution that supports private market initiatives, stronger building codes and land use regulations��"backed up, where needed, by state catastrophe funds and limited, high-level federal financial support for responsibly managed state funds.

PCI urges the Senate to pass flood legislation that does not include the wind provision.

“Adding wind coverage will create artificial subsidies, which essentially means rate hikes for consumers in non-coastal parts of the country who do not face the same wind-damage risks as coastal policyholders,” said Ben McKay, PCI’s senior vice president, federal government affairs.  “It is unnecessary for Congress to expand the flood program, considering that wind coverage is already available either through the private sector or state wind insurance programs. There is no need to have a government program competing with coverage that already exists. We will be working with the Senate to pass needed flood reform without needlessly adding wind exposure to the NFIP.”

According to PCI, the combination of homeowners’ insurance coverage, state wind pools and flood coverage available through the National Flood Insurance Program (NFIP) already provide consumers protection from wind and water damage.  Moreover, the current system provides consumers the opportunity to purchase coverage at a price that reflects the risk based on the location of the property and the likelihood of a loss.

“Residual state-based mechanisms provide coverage for wind damage where no market exists, and private insurers provide wind coverage where there is a market,” McKay said. “Adding wind coverage to the NFIP simply creates a federal government fund that will compete with existing state funds and potentially with the private market.” 

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association.  PCI members write over $194 billion in annual premium, 40.1 percent of the nation’s property/casualty insurance.  Member companies write 51.3 percent of the U.S. automobile insurance market, 39 percent of the homeowners market, 32.1 percent of the commercial property and liability market, and 38.7 percent of the private workers compensation market.

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© 2007 Property Casualty Insurers Association of America

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