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Issues Top the PIA Agenda at the 2004 Federal Legislative Summit

Once again, members of PIA from throughout the nation are set to converge on Washington, D.C. for the 2004 PIA Federal Legislative Summit, which...
March 10, 2004

By Peter Bizzozero
Assistant Vice President, Federal Affairs
PIA National

Once again, members of PIA from throughout the nation are set to converge on Washington, D.C. for the 2004 PIA Federal Legislative Summit, which takes place on March 25, 2004.

Two influential Members of Congress will address FLS participants at our kickoff breakfast. Representative Sue Kelly (R-New York), Vice Chair of the House Financial Services Committee, and Senator Jim Bunning (R-Kentucky), Chair of the Banking Subcommittee on Economic Policy and member of the Finance and Budget committees,
will speak. 

As the FLS approaches, there are indications that Congress may take some measure of action on some of the issues PIA identified in January as our prime issues of focus this year and the ones agents will address during their visits to Capitol Hill.

Already, Congress has begun work on reauthorization and reform of the National Flood Insurance Program (NFIP). Congress may also address crop insurance issues. Proposals for optional federal charters for insurance and reauthorization of the Terrorism Risk Insurance Act (TRIA) may also be debated, but definitive action this year is less certain.

Let's take a closer look at each of these issues and their impact on independent agents.

Optional Federal Charter

Federal regulation of insurance continues to be one of PIA's top priorities.  As an association we are opposed to an optional federal charter system of insurance regulation.  An optional federal charter system simply creates an unnecessary dual/parallel state-federal regulatory system that is counterproductive to effective oversight of the insurance industry.  Rather, PIA supports continuing reform of functional state regulation through the creation and adoption of national standards coupled with a federal proposal to support states' efforts to drive the adoption of these standards.

While it is highly unlikely that any legislation will be passed on this issue this year, action will still occur.  The House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprise will likely hold a hearing on insurance regulation sometime in late March.  It is also very likely that other hearings and discussions will follow. 

Flood Insurance

The NFIP provides more than 90% of the flood insurance in the United States.

Reauthorization of the NFIP before it expires is one of PIA's top priorities in the second half of the 108th Congress.  The current program is due to expire at the end of June.  On November 20, 2003 the House of Representatives passed H.R. 253, the Flood Insurance Reform Act of 2003, reauthorizing and reforming the current NFIP.  At the end of the year, the Senate did not pass H.R. 253, opting instead for two short in-place reauthorizations to allow time for more debate.

The current NFIP reauthorization is set to expire on June 30, 2004.  PIA supports common sense reforms in H.R. 253, but we have placed priority on obtaining multi-year reauthorization for the flood insurance program. Reauthorization ensures that federal flood insurance coverage continues to be available, that claims are paid and mortgage obligations can be met. 

Most of the action on flood insurance will occur in the Senate Banking Committee.  The committee will have to do some speedy work if it hopes to pass a reauthorization bill that reforms the NFIP.  The effective legislative calendar is already shortened because of the elections - there are likely fewer than 75 voting days left.  In that time the committee must hold a hearing that was originally scheduled for February 4, draft a bill, hold a markup on the bill, then get that legislation passed by the full Senate.  Finally a conference must be held with the House to discuss any differences.  All of this must be completed before the end of June.

Realistically, Congress will not let the NFIP expire.  Lawmakers could again pass a temporary reauthorization, but this is not the way to run a national flood insurance program. We must send the message that reauthorization needs to occur before the end of June. The Senate needs to be encouraged to act expeditiously on this issue.  Whether or not agreement on reform legislation is to be reached, reauthorization must still occur.


Acts of terrorism continue to pose an unprecedented challenge for the insurance industry.  It remains difficult, if not impossible, for underwriters to accurately determine premiums based on sound actuarial calculations. Insurers are unable to accurately predict the frequency or severity (to include scale, scope, nature and location) of loss and to effectively spread risk.

TRIA needs to be continued so that our clients have insurance markets and can access terrorism coverage for their obligations. The Act is scheduled to sunset on December 31, 2005; however the renewal cycle in P&C insurance means that carriers will be renewing insurance with exposure into 2006 as early as January 1, 2005. Those renewals will be processed 90 to 120 days in advance of that, and rates & reserving must be decided another 90-120 days before that (May 2004).  So, from a practical standpoint the P&C sector needs a clear understanding in just a few months from the Administration and Congress that TRIA will be continued.

Crop Insurance

Some PIA members who sell crop insurance are criticizing a federally approved crop insurance program. On February 13, the US Department of Agriculture's Risk Management Agency (RMA), which oversees federally-backed crop insurance, approved Crop 1 to offer its Premium Discount Plan. Shortly after that, participation in the program by a second carrier, Occidental Fire & Casualty (OFC), was approved by RMA.

All federally subsidized insurance companies are required to charge farmers the same rate for crop coverage. But with Congress' approval, the new discount program is being offered by the RMA to stimulate competition in the crop insurance industry.

RMA has agreed to schedule a meeting with PIA and other groups to discuss our concerns about this program. Agency officials tell us the meeting will be scheduled in Washington, D.C. in late March, perhaps during our Federal Legislative Summit.

All of our focus issues carry the potential to affect professional insurance agents. The question is, will these issues play out positively or negatively for PIA members? That is why it is important for PIA members to engage in personal advocacy for themselves and their fellow agents.

The challenges facing agents in 2004 are many. PIA agents need to be an active. That is why PIA agents will need to be an active political force at the federal level. Your participation is critical to our success.

Peter Bizzozero is Assistant Vice President of Federal Affairs at PIA National. He can be reached at

This article originally appeared in the March 2004 PIA Connection.