A recent agent survey conducted by PIA National revealed that independent agents are concerned about the status of the National Flood Insurance Program (NFIP). PIA National President Tim Russell discussed the history of the NFIP and its potential future during a business meeting of the Main Insurance Agents Association (MAIA).
Russell estimates that there are about 70 Write Your Own (WYO) insurance companies who participate in the program through what is known as “the arrangement,” under which approximately 31% of the premium is reimbursed to the WYO company for its expenses, including commissions to independent agents. Some members of Congress want to reduce the reimbursement from 31% to 27%.
“That would be horrible, and I can tell you why,” said Russell. “If you remember the health insurance legislation and the medical loss ratio (MLR)…commissions for health insurance went away. It’s a problem that could happen with flood insurance.” Russell also said that while PIA supports legislation to encourage the development of a private flood insurance market, it would not cure all the NFIP’s woes. PIA supports a long-term reauthorization of the NFIP.