ABIR: Call For US Flood Reform
The Association of Bermuda Insurers & Reinsurers yesterday [December 2] partnered with a major American reinsurance group in calling on Congress to at least partially privatise the US National Flood Insurance Programme (NFIP).
ABIR president Bradley Kading and Frank Nutter, president of the Reinsurance Association, said in a statement presented Thursday at a Federal Emergency Management Agency public forum that NFIP is not an insurance programme the way it currently operates — but should be one
Protecting US taxpayers and providing them with value for money should be a guiding principle of NFIP, the reinsurer groups said.
“One of the ways to achieve that is to privatize the NFIP in whole or in part,” Mr. Kading and Mr. Nutter said. “In this regard, the private reinsurers and capital markets have the capacity and interest in underwriting flood insurance risk.”
Under some circumstances, “the private (re)insurance sector could assume the flood risk over time,” which would eliminate or reduce the government’s role in providing coverage. “An essential element of achieving that goal is that premiums for any continuing NFIP should be set at true risk rates based on sound underwriting including credible mapping, taking into consideration potential catastrophic loss,” the ABIR and RAA leaders said.
The statement follows on from a letter Mr. Kading sent to then-Senate Banking chairman Chris Dodd in September, urging Congress to consider reforming the NFIP programme. “It’s unfortunate that the NFIP has been forced to operate in such a way that it became a liability to US taxpayers rather than a positive force for change in promoting hazard mitigation and providing essential coverage to those in need of flood insurance protection,” Mr. Kading said in that letter to the Democratic Connecticut Senator.
In recent years, the NFIP has been extended repeatedly on a short-term basis because US House of Representatives and Senate leaders could not agree on whether the programme should be required to offer windstorm as well as flood coverage. However, both houses of Congress did agree in September to extend the programme through next year without a windstorm component.
The Association of Bermuda Insurers and Reinsurers represents 23 international insurers and reinsurers based on the island. With headquarters and operations in Bermuda and with operating subsidiaries in the United States and Europe these carriers derive business income from nearly 200 countries around the world. The ABIR membership has 1,800 employees in Bermuda and 31,000 employees around the world.
ABIR’s mission is to represent the public policy interests of Bermuda’s Class 4 insurers and reinsurers around the world, giving special priority to regulatory action in Bermuda, Europe, US, and international regulatory forums.
