As Flood Damages Mount, the Senate Ponders Insurance Reform ~

After this summer’s debt ceiling drama in D.C., the U.S. Senate left town for its summer recess without considering a bill already passed by the House of Representatives that would reform the nation’s troubled National Flood Insurance Program (NFIP), and re-authorize the program for five years. But while the Senate took its break, Mother Nature slammed the nation with record-setting flooding as Hurricane Irene and Tropical Storm Lee hit the mid-Atlantic, the Gulf, and the Northeast with a wet, sloppy one-two punch. And back in session, the Senate is finally taking up the NFIP issue with what is, for that body, at least the appearance of haste. The Senate Banking Committee has now voted to approve a version of the five-year extension bill, reports the Biloxi Sun-Herald (“Senate committee OKs NFIP,” by Maria Recio). But neither the House bill nor the committee-passed Senate version takes up the wind-versus-water issue championed by Mississippi Senator Roger Wicker. Thousands of Mississippi homeowners were denied payouts by insurance companies, or had to fight for insurance awards in court, because the insurers argued that the homes were destroyed by storm surge, not by high wind — even though homeowners maintained that the wind destroyed some or all of the structures before the water arrived to wipe the slabs clean. Reports the Sun Herald, “Wicker’s COASTAL provision for homes left as slabs in a hurricane’s wake would require the use of data from the National Oceanic and Atmospheric Administration, instead of insurance company discretion, to determine the cause of the damage.” (The acronym stands for “Consumer Option for an Alternative System To Allocate Losses.”) Senator Wicker says Senate leaders have promised him that he could present his idea as an amendment to the NFIP reauthorization bill on the Senate floor, when the time arrives. In the recent damage from Hurricane Irene and Tropical Storm Lee, however, the shoe is on a different foot. Many policies that cover windstorm damage now include a “hurricane deductible” that requires the homeowner to pay the first $1,000 or $5,000 of damage from a hurricane. In New York and New England, that issue has come to the fore in recent weeks — and in most cases, it appears, the fact that Irene was only a tropical storm, and not a hurricane, at landfall means that the deductibles won’t kick in. The Insurance Journal has that story (“Irene Raises Hurricane Deductible Questions in Hard-Hit Northeast States,” by Young Ha). “New York and New Jersey regulators said recently that hurricane deductibles should not apply on homeowners’ insurance policies for Irene damages in their states,” the InsuranceJournal reported. Connecticut is different, however: “In Connecticut, hurricane deductibles are permitted only on coastal properties. And on some policies — and it varies by company — the hurricane deductible is triggered when a mere hurricane warning is issued for the state,” the Journal reports. “This was the case with Irene, even though it was downgraded by the time the storm hit. Now it is up to the insurers whether they want to apply the hurricane deductible, said Donna Tommelleo, a spokeswoman for the Connecticut Insurance Department.” Connecticut regulators are negotiating with insurance companies to get the hurricane deductible waived for homes damaged or destroyed by Irene, the Journal reports. And regulators have said that companies that either agreed to waive the deductibles, or have deductible triggers that were not met in this case, account for 80% of the insurance market in the state.