Rep. Gene Taylor’s (D-Miss.) bill pushing for multiple-peril insurance is in, well, peril. The continuing resolution of the bill crafted in 2007 was scheduled to expire March 6. The new Congress and the Obama Administration would either have to pass a full authorization of the bill or provide another temporary extension by that date or the measure would die.
As of March 3, neither of these two options had been exercised. However, Taylor is far from giving up on the proposal that would guard homeowners and business owners against both wind and flooding. In fact, he has attacked the issue anew, proposing the Multiple Peril Insurance Act of 2009 and launching a page on his web site (www.taylor.house.gov/insurancereform) to push the bill.
“Throughout coastal America, property insurance companies have dramatically increased premiums on existing policies, cancelled existing policies or have stopped writing new policies altogether for our nation’s home and business owners,” Taylor said. “The Multiple Peril Insurance Act will solve this problem.”
In the aftermath of Hurricane Katrina, some insurance companies claimed that insured properties were damaged by wind, not flooding. Thus, the insurers said they were not required to pay on those policies, leading to bitter feelings by Coast residents, including Taylor, who lives in Bay St. Louis.
“People who played by the rules and expected insurance companies to play by the same rules got screwed,” Taylor said.
Most of the venom was reserved for State Farm Fire and Casualty Insurance Company. Some accused the firm of scheming to defraud policyholders. A review completed last year found questionable decisions and irregularities, but cleared State Farm of systematically mistreating policyholders. (State Farm did agree to reopen all “slab cases” through a Mississippi Insurance Department-monitored program, which resulted in an additional $88 million dollars being paid to policyholders.)
Before this review was complete, Taylor introduced his Multiple Peril Insurance Act of 2007. The bill’s aim was to create an option within the National Flood Insurance Program (NFIP) to offer both wind and flood coverage in one policy.
Taylor worked hard to promote the bill, even bringing House Speaker Nancy Pelosi and other House leaders to the Gulf Coast to get a firsthand perspective. Current Insurance Commissioner Mike Chaney said in 2007 when running for the office that the bill was “a step in the right direction.”
The bill received bipartisan support. Republican Gov. Haley Barbour and former Sen. Trent Lott (R-Miss.), who also lost his home to Katrina, sent letters of support for the measure.
“We must work together, federal, state and private to create a financially sound and taxpayer friendly solution,” Barbour wrote.
The bill (H.R. 3121) passed the House by a vote of 263-146. However, the Senate passed its own bill that did not include the wind provision in the NFIP reauthorization. This prevented full reauthorization, and Taylor and the bill’s other supporters had to settle for the aforementioned continuing resolution.
With time running out, Taylor issued a release March 2, 2009. that introduced the new bill and the corresponding web site. Taylor said his bill would cover owners in the event of a hurricane “without lengthy legal disputes over how much damage was caused by wind and how much was caused by flooding.” He added that the legislation would also “reduce future property damage by requiring participating communities to adopt International Building Codes (IBC).”
Under his bill, residential coverage limits would be $500,000 for the structure and $150,000 for contents and loss of use. Nonresidential coverage would be $1 million for the structure and $750,000 for contents and loss of use. This coverage would only be available where local governments adopted and enforced the IBC or equivalent building standards.
Taylor said the coverage would be risk-based and actuarially sound, would pay for itself and would spread the risk geographically, offering more stability than state wind pools.
“As we found out after Katrina and our fellow Texans are finding out after Ike and Gustav, short of home and business owners hiring lawyers and engineers to take their carriers to court, insurance companies routinely and deliberately fail to pay on legitimate hurricane-related wind claims,” Taylor said.
Timeline of Multiple Peril Insurance Act of 2007 and 2009
• Aug. 29, 2005 – Hurricane Katrina devastates the Gulf Coast
• Feb. 28, 2007 – Rep. Gene Taylor testifies before the House Subcommittee hearing on Katrina insurance claims, and pushes for passage of multiple-peril insurance legislation.
• July 19, 2007 – Taylor’s bill (H.R. 3121) introduced in the House of Representatives
• Aug. 13, 2007 – Taylor hosts a town hall meeting on the Coast, which is attended by House Speaker Nancy Pelosi and House Majority Whip James Clyburn.
• Sept. 24, 2007 – State insurance commissioners hold a public meeting in Mobile, Ala., to discuss the insurance market in disaster-prone areas. Then Mississippi Insurance Commissioner George Dale says, while he supports adding wind to a flood policy, Taylor’s bill would not reduce rates. That same day, Taylor’s bill passes the House Committee on Financial Services.
• Sept. 27, 2007 – House passes H.B. 3121.
• May 8, 2008 – Sen. Roger Wicker (R-Miss.) introduces an amendment to S. 2284, a measure sponsored by Sen. Christopher Dodd (D-Ct.), to include a wind provision such as in H.R. 3121. Wicker’s amendment is defeated 74-19.
• May 13, 2008 – Senate passes the companion H.R. 3121 in lieu of S. 2284 with an amendment by a vote of 92-6, then returns it to the calendar.
• July 10, 2008 – Rep. Michael Capuano (D.-Mass.) moves that the House disagree with the Senate amendment. The House requests a conference. The differences prevent a final reauthorization bill in the 110th Congress. Instead, the continuing resolution for fiscal year 2008 extends the National Flood Insurance Program until March 6, 2009.
• March 2, 2009 – Taylor introduces the Multiple Peril Insurance Act of 2009.
Contact MBJ staff writer Wally Northway at email@example.com.