Earlier this month, Rep. Gene Taylor (D-Miss.) reintroduced legislation, the Multiple Peril Insurance Act of 2009 (H.R. 1264), into the House of Representatives that would amend the National Flood Insurance Program (“NFIP”) to allow homeowners to purchase multiperil insurance covering windstorm damage in addition to flood damage. As we reported here, similar legislation was introduced in 2007 as part of an NFIP extension bill, but the House could not reach an agreement with the Senate on the inclusion of multiperil coverage. Attempts to amend the NFIP in 2008 also failed. The NFIP, which was due to expire at the beginning of this month, was recently extended through September 2009.
H.R. 1264 was introduced to allow coastal residents alternative access to windstorm insurance apart from the private marketplace. Rep. Taylor contends that coverage availability from private insurers is either non-existent or the cost is too high for most coastal residents. Meanwhile, a letter was written by the American Insurance Association, the National Association for Mutual Insurance Companies the Property Casualty insurers Association of America, the Financial Services Roundtable and the Reinsurance Association of America (the “Letter”), to the House subcommittee reviewing H.R. 1264. The groups asked the House subcommittee to oppose the legislation because, among other reasons, it would dramatically increase the NFIP’s exposure should a major catastrophe occur and the NFIP is currently $18 billion in debt, and it would not eliminate the need for multiple insurance policies for many homeowners who are required to have higher limits under their mortgage policies.
We will continue to monitor this legislation and post further developments on InsureReinsure.com.