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RIMS


March 2017 Newsletter 3/1/2017

Whitney B. Craig RIMS Government Relations Director


 

Flood Insurance Bill Reintroduced in Congress
This month, Members of Congress reintroduced the Flood Insurance Market Parity and Modernization Act. This bill, which passed the House of Representatives in April 2016, is designed to incentive more private insurance participation in covering flood risks. It clarifies that individuals who buy private flood insurance should receive the same treatment as those who purchase it through the National Flood Insurance Program if they're trying to obtain federally backed mortgages that require flood insurance.

Senator Menendez Introduces NFIP Reauthorization Bill
Senate Committee on Banking, Housing, and Urban Affairs member Bob Menendez (D-N.J.) has introduced legislation aimed to reform the National Flood Insurance Program (NFIP).The bill includes provisions to make rates more affordable for low- and middle-income families and would repeal "arbitrary" surcharges on homeowners and businesses. It also would extend the 60-day deadline to appeal a claim to the Federal Emergency Management Agency (FEMA), enforce the 90-day deadline for FEMA to adjudicate an appeal and award the full amount if FEMA fails to comply with the deadline, and require all appeals to be heard by an outside arbitrator. In addition, Write Your Own insurers would be required to pay attorney fees and other penalties to the policyholder when it is determined they engaged in bad faith in underpaying claims, and profits for these insurers would be limited as well.

RIMS on the Mall California Recap
On March 21-22, more than 20 RIMS members attended the ninth annual RIMS on the Mall in Sacramento, CA. Speakers included Christine Baker, California’s Director of the Department of Industrial Relations (DIR). Attendees also met with 18 Assembly and Senate members and primarily discussed workers’ compensation issues.

RIMS on the Mall participants with Senator Jim Neilsen and Assembly Member Kevin Kiley

 

 

Border Tax May Have Negative Impact on Insurance and Reinsurance
Included in the 2016 GOP tax plan being addressed now, there is a provision that would lower the corporate income tax rate to 20 percent and convert it into a destination-based cash-flow tax. Specifically, the income tax would apply to businesses’ income from sales in the United States whereas presently, the income tax applies to businesses’ income from production in the United States. Currently, U.S. insurance companies write off the cost of reinsurance as a legitimate business expense, however the border adjustment tax would prevent insurers from doing that if the reinsurer was based overseas. A number of studies have analyzed how this would affect the insurance market. The Brattle Group found that the effects of the border adjustment would be to reduce the supply of reinsurance by between $15.6 billion and $69.3 billion and force U.S. consumers to pay between $8.4 billion and $37.4 billion more each year just to get the same coverage. Overall, property and casualty insurance rates would be expected to rise by 3.4 percent, 3.8 percent in workers' compensation; 5.7 percent in earthquake insurance; 7.2 percent in boiler and machinery insurance; and 7.8 percent in aircraft insurance.


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About RIMS

As the preeminent organization dedicated to educating, engaging and advocating for the global risk community, RIMS, the risk management society™, is a not-for-profit organization representing more than 3,500 corporate, industrial, service, nonprofit, charitable and government entities throughout the world. RIMS has a membership of approximately 11,000 risk practitioners who are located in more than 60 countries. For more information about the Society’s world-leading risk management content, networking, professional development and certification opportunities, visit www.RIMS.org.

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