WSIA closely monitors the work of federal legislators and regulators for issues that impact the surplus lines insurance industry. WSIA provides comments on legislation or regulations when appropriate and in the best interest of the WSIA membership.
Federal Definition of Private Flood Insurance
The Flood Insurance Market Parity and Modernization Act was first introduced in 2014 by Rep. Ross and then Congressman Patrick Murphy (D-FL) and Senators Heller and Tester (S. 563) in 2014 and again in 2015 and 2016. In 2017, Representative Kathy Castor (D-FL) replaced Rep. Murphy as a cosponsor with Mr. Ross after Mr. Murphy left Congress (H.R. 1422). Since 2014, the Association has strongly supported this legislation that will revise the federal definition of private flood insurance. Revisions are necessary to amend the current definition to ensure eligible surplus lines and other private insurers private market solutions and alternatives are available to consumers in need of unique and complex flood risks and that the policies are accepted by lenders.
WSIA works in coalition with other trade association to help Congress understand the importance of the changes proposed in the bill and that the changes are necessary to relieve the confusion caused by the Biggert-Waters Act of 2012 (BW12). BW12 encourages participation from the private market as an alternative or supplement to the NFIP, but the definitions used have created confusion and uncertainty for lenders accepting the products. The proposed legislation will incorporate NRRA-compliant language as part of the proposed revised definition and provide appropriate guidance to the lending community on the acceptance of private market flood insurance to fulfill the mandatory purchase requirement when an individual or company seeks a federally-backed mortgage.
Tied to this legislation is the reauthorization of the National Flood Insurance Program (NFIP), originally set to expire on September 30, 2017. On September 26, Congress agreed to reauthorize the NFIP for three months, until December 8, 2017. The short-term reauthorization was done in conjunction with providing emergency aid to the states impacted by Hurricanes Harvey, Irma and Maria. In 2018, after Hurricane Michael and other flooding events, the program did not receive any additional funding or debt forgiveness, and at this time, has approximately $10 billion left in borrowing authority, if needed.
Since the scheduled expiration of the program on September 30, 2017, the NFIP has received nine short-term reauthorizations to December 8, December 22, January 19, February 8, March 23, July 31, November 30, December 7 and December 21 . Until March 23, the extensions were tied to the federal budget process, resulting in less focus on the reform of the program as Congress worked through the overall budget process. However, on March 23, Congress decoupled the NFIP reauthorization from the budget omnibus bill and extended the program to July 31, 2018. On July 31, Congress approved an additional four-month extension to November 30, 2018, when it extended the program for one week to December 7, then again to December 21. With the last two short-term extensions, the NFIP may potentially be once again connected to the budget process.
While the House approved a comprehensive flood reform plan in 2018, which included H.R. 1422, among a number of other broad program reforms, the Senate has not yet taken action on the legislation or the reform measures similar to the House package. If the Senate does not take action before the end of the year, the legislation will die with the end of the 115th Congressional Session and will need to refiled in the 116th Congressional Session in January. Rep. Ross has retired from Congress and Sen. Heller did not win reelection, so Rep. Castor and Sen. Tester will likely seek new cosponsors and refile the same or similar legislation early in the new session.
Timeline of Legislation
On January 19, the federal government is temporarily shut-down when Congress fails to pass its budget. As part of the government shut-down, the NFIP temporarily shuts down as well; however, the government shut-down lasts only through the weekend and results in the NFIP becoming operational again on January 22. As part of the Budget Omnibus package, Congress extends the NFIP through February 8.
On February 8, Congress includes the reauthorization of the NFIP in another short-term extension of the Omnibus action, resulting in a new expiration date for the NFIP of March 23.
As the March 23 expiration deadline approached, the NFIP is extended through July 31, 2018, separating the NFIP from the budget process.
On July 31, Congress issues another short-term four-month extension of the NFIP through November 30, 2018. No actions taken on private flood insurance legislation as part of the extension.
On November 30 the NFIP is granted a one-week extension to December 7.
Flood legislation was quickly reintroduced in both chambers as H.R. 1422/S.563.
On June 21, House Financial Services Committee passes H.R. 1422 as part of a broader package to address reform and reauthorization of the National Flood Insurance Program (NFIP), but the full House and Senate do not pass the legislative package.
On September 28, the House adds H.R. 1422 to an unrelated bill to reauthorize the Federal Aviation Authority, but the Senate declines to approve the legislation with the private flood provision.
On November 14, the House passed the 21st Century Flood Reform Act (H.R. 2874), a comprehensive flood insurance package with a five-year reauthorization and reform of the NFIP, including the Ross-Castor private flood legislation. The Senate did not take action on this bill and continues to work on various alternative proposals for comprehensive reform and reauthorization. Although the Senate is not expected to take action on this version of the bill, it is expected to provide some form of a companion proposal which would incorporate some of the House bill.
On December 8, 2017 the House and Senate both adopted a short-term extension of NFIP to December 22, 2017 and on that date followed with another short extension to January 19, 2018.
On December 4 Congress extended the NFIP through December 21.
WSIA legacy organization, NAPSLO, testified in support of H.R. 2901 before the House Financial Services Subcommittee on Housing and Insurance.
On April 28, 2016 the U.S. House of Representatives passed H.R. 2901 on a 419-0 vote, after passing the House Financial Services Committee 53-0. Unfortunately, the legislation failed to move in the Senate before Congress adjourned.
Material Supporting Legislation
December 4, 2018 - Consumers deserve a long-term flood insurance solution
February 9, 2018 - Common Misconceptions of the Surplus Lines Industry in the Debate of H.R. 1422/S. 563
February 9, 2018 - Surplus Lines Market Data and Statistics
November 13, 2017 - 32 Organization Letter of Support to Representatives
April 28, 2017 - Common Misconceptions of the Surplus Lines Industry in the Debate of H.R. 1422 and S. 563
March 13, 2017 - NAPSLO Letter of Support to Representatives
March 13, 2017 - NAPSLO Letter of Support to Senators
January 24, 2017 - Surplus Lines Market Data and Statistics
January 6, 2017 - NAPSLO Comments to Federal Agencies on Proposed Rule Making
January 2017 - Welcome to Congress letter
April 26, 2016 - NAPSLO letter to NAIC Property & Casualty (C) Committee regarding private flood insurance and the surplus lines market
February 26, 2016 - NAPSLO Letter of Support to House Financial Services Committee regarding H.R. 2901
February 22, 2016 - Surplus Lines Market Data and Statistics
January 2016 - NAPSLO Testimony before House Financial Services Subcommittee on Housing and Insurance Supporting H.R. 2901
June 2015 - NAPSLO Letter of Support to Representatives Dennis Ross and Patrick Murphy
November 19, 2014 - NAPSLO Testimony before House Financial Services Subcommittee on Insurance Supporting H.R. 4558
May 20, 2014 - NAPSLO Letter of Support to Representative Dennis Ross
December 2013 - NAPSLO Comments to Federal Regulators on Proposed Revisions to Federal Flood Insurance Regulations
Foreign Account Tax Compliance Act (FATCA)
Surplus lines brokers and insurers’ compliance obligations related to the Foreign Account Tax Compliance Act (FATCA) took effect on July 1, 2014. WSIA has compiled a number of helpful resources and updates related to FATCA reporting requirements. This page provides links and information that will help you as you develop your own compliance program. To learn more about FATCA we recommend starting with our Executive Summary and Legal Memorandum linked below.
Since FATCA was passed, WSIA and many other members of the P&C industry have asked for relief from FATCA reporting due to its unnecessary and burdensome application to our industry. Ultimately, FATCA is directed at foreign financial institutions and financial intermediaries and aims to prevent tax evasion by U.S. citizens, U.S. residents and corporations through the use of offshore accounts, but the application to the law cast a wide net, include groups like our industry that is not in a position to commit the type of tax evasion the law intended to curtail.
Legislative has twice been introduced in the House to eliminate the P&C industry’s requirement to report non-cash-value premiums under FATCA in H.R. 871 (2017) and H.R. 6159 (2016). Although no action has been taken on the legislation, work continues to educate Congress and the Treasury Department on the industry’s concerns in hopes of granting relief; however, until such time that legislation is passed or a regulation is issued providing the relief, industry members must continue to maintain FATCA compliance.
WSIA Issued Resources
WSIA closely monitors developments related to FATCA. We encourage you to reach out to us with questions or concerns that we may be able to help you with or direct you to proper resources.
WSIA FATCA contact: Keri Kish, Director of Government Relations, at firstname.lastname@example.org.
National Association of Registered Agents and Brokers (NARAB II)
The National Association of Registered Agents and Brokers (NARAB II) was enacted as part of the Terrorism Risk Insurance Program Reauthorization Act of 2015. WSIA strongly supported the creation of NARAB II and advocated for its passage with Congress because it will streamline agent and broker licensing for those operating on a multi-state basis. It creates a nonprofit board governed by a panel of state insurance regulators and industry representatives to create rigorous standards and ethical requirements with a goal of applying licensing, continuing education and nonresident insurance producer standards on a multi-state basis. With a focus on nonresident licensing, agents or brokers applying for a national license through NARAB will first be required to hold a current license in their home state, pass a national criminal background check and meet the criteria established by the Board, which shall include standards for personal qualifications, educational training and professional experience.
The underlying NARAB legislation directed the President, with the advice and consent of the U.S. Senate, to appoint the 13 Board members (8 regulators and 5 industry members) 90 days from January 12, 2015. Unfortunately, the NARAB Board of Directors has yet to be appointed and therefore NARAB has yet to become operational. The former President issued 10 nominations but none of the nominees received hearings by the Senate prior to the expiration of the last Congress. Prior nominees may request reconsideration by the new administration; however, the administration may announce new nominees at its discretion for consideration by the Senate. Industry remains dedicated to NARAB and is hopeful that the President will take quick action to nominate board members in the near term.
Once a quorum of the board is approved, it will first establish rules, requirements and procedures for membership, as well as a national licensing clearinghouse. For additional information about NARAB, visit WSIA's NARAB implementation resource.
Terrorism Risk Insurance Program Reauthorization Act of 2015
On January 12, 2015 the Terrorism Risk Insurance Program Reauthorization Act of 2015 was enacted, reauthorizing the program for an additional six years (12/31/2020). Although the program expired on December 31, 2014 due to lack of action by Congress, the January reauthorization allowed for no gap in program coverage. Key changes to the TRIA program that began January 1, 2016 are:
- Federal share reduces from current 85% to 80% (by 1% per year)
- Program trigger increases from current $100M to $200M (by $20M per year)
- Industry’s aggregate retention increases from current $27.5B to $37.5B (by $2B per year), and Treasury’s recoupment rate increases from 133% to 140%
View a side-by-side comparison of expired TRIA program and the new Terrorism Risk Insurance Program Reauthorization Act of 2015.
In March 2016, FIO issued a voluntary data call, which treated admitted and nonadmitted insurers consistently. In July 2016, the NAIC also issued a mandatory data call related to terrorism insurance. In 2017, both the NAIC and FIO issued mandatory data calls. Insurers should expect to respond to both state and federal TRIA data calls until otherwise advised by individual states or the federal government by regularly reviewing notices on the Department of Treasury’s FIO website or the National Association of Insurance Commissioners’ website.
- NAIC Model Bulletin on Filing Procedures for Compliance with TRIA Program Reauthorization Act
- U.S. Department of Treasury issued interim guidance concerning the TRIA Program Reauthorization Act.
- FIO reports: 2016, 2017
- We recommend reviewing Department of Insurance websites annually for TRIA related bulletins to ensure you maintain appropriate compliance as it relates to your practice.
Additional Comment Letters
December 10, 2014 - Trade Association TRIA Support Letter
May 15, 2014 – NAPSLO Letter of Support for Insurance Data Protection Act
February 25, 2014 - NAPSLO Testimony before Senate Banking Committee on TRIA
June 10, 2013 – NAPSLO Comments to FIO on Natural Catastrophes and Insurance
May 17 and February 27, 2013 – NAPSLO Letters to FHFA regarding Lender Placed Insurance
September 16, 2013 – NAPSLO Comments to FIO on TRIA
March 19, 2013 – NAPSLO Testimony to Senate Banking Committee on NARAB