PIA Looks Out for Consumers, Agents by Opposing Flood Insurance Legislative Package

WASHINGTON, June 12 -- The National Association of Professional Insurance Agents issued the following news release:

As legislation to reauthorize the National Flood Insurance Program (NFIP) starts to move in Congress, the National Association of Professional Insurance Agents (PIA) has taken a strong stand against a package of draft bills in the House to reauthorize the National Flood Insurance Program (NFIP) that cuts insurer reimbursement and threatens agent compensation.

One of the proposals under consideration to address the NFIP's $24.6 billion debt would lower the Write-Your-Own (WYO) reimbursement percentage, which is used by carriers to pay administrative expenses as well as agent commissions, among other things. Most WYOs have acknowledged that in order to remain in the program they will likely be forced to pass any cut to the WYO rate on to agents in the form of commission cuts.

"A cut to the reimbursement rate for Write Your Own insurance companies would likely trickle down to independent agents who sell this very complicated and vital line of insurance," said Jon Gentile, vice president of government relations of PIA National. "PIA rejects any proposal to reauthorize the NFIP that would impede agents' active engagement in selling flood insurance."

In congressional hearings on flood insurance, many members have made it clear that the NFIP needs more, not fewer, policies in force to fiscally strengthen it. Cutting the expense allowance will have the opposite effect, as independent agents will stop selling flood insurance through the NFIP altogether if incentives to do so are made insufficient.

"One of the goals of reforming the NFIP is to increase sales of policies, especially preferred risk policies, to put the program on a firmer financial footing," Gentile said. "Reducing agent compensation undermines that goal by applying a disincentive to increasing sales. It could lead to an exodus of qualified independent agents from the flood program, similar to the one that occurred from the Affordable Care Act (ACA) when agent commissions were cut."

PIA will continue its steadfast defense of its member agents' interests by opposing any cut in the WYO reimbursement rate and by advocating that protection for agent compensation be included as specific language in any NFIP renewal legislation.

"Homeowners and business owners alike turn to their independent insurance agents for help in protecting their property from losses due to flooding. That's why PIA will oppose this legislative package that lowers the WYO reimbursement rate without protections for agents," Gentile said.