Senate Banking, Housing & Urban Affairs Mark-up
On May 21st, the U.S. Senate Banking, Housing & Urban Affairs Committee held a mark-up for “The Financial Regulatory Improvement Act of 2015,” and was voted out of the committee along party lines, with 12 voting in favor and 10 voting against the measure. The bill was introduced by Senate Banking Committee Chairman Richard Shelby (R-AL). Chairman Shelby’s bill aims to improve transparency within the Financial Stability Oversight Council (FSOC) and roll back provisions in Dodd-Frank. The Senate Banking Committee also released a section by section summary, breaking down each provision of the bill.
“The Financial Regulatory Improvement Act of 2015” contains two measures that PIA supports: The Policyholder Protection Act of 2015 (S.798), and the International Insurance Capital Standards Accountability Act (S.1086). The Policyholder Protection Act of 2015 would allow state regulators to protect policyholders in their state by ensuring that insurance companies structured under larger financial institutions could not be held financially responsible for their affiliated bank’s failure or financial crisis. This measure provides protection for the state-based insurance system by prohibiting federal regulators from using assets designated to pay out insurance claims to “prop up” an affiliated bank, and it allows for state regulators to rehabilitate a troubled bank, rather than moving directly to liquidation. Senator Shelby’s bill also includes S.1086, which would establish an Insurance Policy Advisory Committee on International Capital Standards and other insurance issues at the Federal Reserve. This measure would also support increasing transparency and public observer access to working groups and meetings at the International Association of Insurance Supervisors (IAIS).
Senate Democrats opposed Chairman Shelby’s bill and accused Republicans of trying to roll back broad swaths of the Dodd-Frank law. Democrats on the committee instead supported a narrower bill, offered as an amendment during the markup, introduced by their ranking member on the committee, Senator Sherrod Brown (D-OH), which would provide narrower regulatory relief, confined only to community banks and credit unions. This bill can be read here. The Democratic bill did not include PIA-supported provisions and was defeated along party lines.
After the markup, Chairman Shelby said that he intended the markup to serve as the beginning of negotiations on the regulatory relief bill, and he intends to engage in continued negotiations with Democrats through the summer before bringing the bill to the Senate floor. While the bill passed along partisan lines in the markup, in order to pass the full Senate it will need to be bipartisan due to the 60 vote threshold needed to bypass procedural hurdles.
PIA will continue to be engaged with members of the Committee during the negotiation process to advocate for the inclusion of the Policyholder Protection Act and the International Insurance Capital Standards Accountability Act in a final, bipartisan bill.
2015 National Flood Conference
The 2015 National Flood Conference (NFC) was held May 17-20 in Arlington, Virginia. The program included sessions of interest to agents; insurers; underwriters; legal and claims; floodplain managers; lenders; flood servicers; and the government. PIA National participated in the NFC, led by PIA National President Richard A. Clements.
Sandy Claims Review Letters Mailed to Policyholders
On May 15, the Federal Emergency Management Agency (FEMA) sent out letters to give policyholders affected by Superstorm Sandy the opportunity to request a review of their Sandy flood insurance claims, to ensure they received a proper loss payment. Policyholders may initiate this claim review in two ways: by telephone or by visiting a webpage to download an application and submit it. The letter was sent by FEMA to approximately 142,000 Sandy policyholders, with the final mailing set to take place on June 11, 2015.
House Hearing on Flood Insurance
The U.S. House Financial Services Committee’s subcommittee on Housing and Insurance is scheduled to hold a hearing on June 2nd titled, “The National Flood Insurance Program: Oversight of Superstorm Sandy Claims.” The sole witness is Brad Kieserman, FEMA’s Deputy Associate Administrator.
The hearing comes on the heels of the recent launch of the U.S. Senate Task Force on Superstorm Sandy, as reported in the May update, led by the senators from New Jersey and New York. Late last month, one Task Force member, Senator Chuck Schumer (D-NY), said that he’d like to see the Write Your Own (WYO) private insurance companies participating in the NFIP removed from the program. Senator Schumer claims the WYOs don’t properly represent homeowners and have profit-driven motivations. Senator Schumer has floated the possibility that FEMA work with a single company to sell and manage policies. FEMA has said that all options, including the one Senator Schumer has suggested, are being considered.
PIA is engaging with lawmakers on both the Sandy claims process as well as the future reauthorization of the NFIP, which expires in 2017.
On May 4, 2015, PIA submitted comments on proposed rule concerning the Excise Tax (also known as Cadillac Tax) on High Cost Employer Health Plans (Notice 2015-16). While PIA agrees that controlling healthcare costs is important, PIA is concerned that the forthcoming excise tax will have a disparate impact on certain classes. The tax is intended to target only high cost employer-sponsored health plans, not moderate benefit plans. However, a Mercer survey recently estimated that it would impact 31% of employers in 2018 and 51% of employers by 2022, indicating the excise tax will have a much broader effect than Congress intended.
In addition to our own comments, PIA also signed on to comments with a coalition opposed to the excise tax. As reported in the May government relations update, we are also advocating in favor of two bills that would repeal the tax before it is implemented in 2018.
The Federal Advisory Committee of Insurance (FACI), a committee of 21 state insurance regulators, consumer advocates, insurance company executives and other insurance experts, met on April 7. FACI advises the Federal Insurance Office (FIO) on important insurance issues. PIA attended the meeting.
The committee discussed price optimization, a controversial underwriting practice of using information unrelated to risk to set rates for a particular insured and is a concern of many consumer advocates. The FACI Affordability and Accessibility of Insurance subcommittee considered the issue and recommended that regulators should scrutinize outcomes of insurance rating practices to see if they are having a disparate impact. At least three states have already issued bulletins on price optimization; Florida has banned the practice and New York has issued a request for information on the issue.
FACI also heard two presentations on risk mitigation strategies: one from the Insurance Institute for Business and Home Safety (IBHS), discussing wind and wire fire mitigation efforts; and one from FEMA, discussing a recent executive order on floodplain management. Superintendent Benjamin Lawsky of New York also briefed the committee on cybersecurity activities, stating that the New York Department is focusing on risk management strategies for insurance and financial services companies. FIO Director Michael McRaith stated that the Department of Treasury is also working on cybersecurity issues.
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