Insurance Topics Highlighted During PAR Meetings

Realtors® heard an update on insurance issues from Austin Perez, senior policy advisor on insurance issues with the National Association of Realtors®, last week in Harrisburg.

Association Health Plans

Perez said NAR is urging Congress to pass the Association Health Plans (AHP) Act to provide an affordable, high quality health coverage option for real estate professionals. He noted that it was approved during the first Trump administration, but the court struck it down.

“This will be a top priority at the Realtor® Legislative Meetings in Washington, DC,” he added. “NAR testified before Congress at the House Education and Workforce Committee to explain how important AHPs are and that they are not ‘skinny’ health plans, but actually high-quality plans.”

National Flood Insurance Program

The National Flood Insurance Program must be extended before Sept. 30, and NAR supports long-term reauthorization and reform. The NFIP has been extended 33 times since September 2017.

“There is some uncertainty about the Federal Emergency Management Agency, which oversees the NFIP,” Perez said. “We are educating the administration and Congress about the importance of this program to real estate markets.”

“The NFIP injects $70 billion into the economy each year due to home sales, and 40,000 home sales per month are dependent on this program,” he added. “One million jobs are made possible by the NFIP.”

However, Congress will have to address that the NFIP is losing $1.4 billion per year due to subsidized insurance rates and the policy concentration in 30 counties along the Gulf Coast.

Perez said there are a few tips for real estate professionals to keep in mind to help their clients:

• Property resource – Use FEMA’s facts like “wherever it rains, it can flood” or “an inch of flooding can cause $25,000 of building damage.”
• Not risk experts – Please don’t discourage the use of science-based risk assessment tools like First Street’s and always avoid statements outside the real estate licensure and training.
• Credible contact lists – Make sure you have knowledgeable insurance advisors on your team, as well as licensed surveyors and floodplain managers.
• People connectors – Be ready with contact info for a short list of expert contacts to help clients answer questions.

“Have a trusted flood insurance agent to refer your clients to,” Perez added. “And know who the local floodplain managers are in your local municipalities. They are a great resource.”

NAR provides several resources about flood insurance, including a Consumer Guide, NAR Legal Guidance of Flood Insurance Disclosures, NAR Primer: Cost of Flood Insurance, NAR Primer: Flood Maps and Zones and an NAR Flood Insurance page. Another recommended resource site is floodsmart.gov.

Home Insurance

“Home insurance is a risky business,” Perez said. “Insurance cost and availability is becoming a major issue in high-risk areas across the country. Home insurance companies have been losing money for the past five years and are starting to pull back from some high-risk areas.”

Insurance companies have been raising rates or reducing coverage in high-risk areas to address the rising costs of insuring and replacing homes due to natural disasters. NAR supports the development of federal disaster public policies that proactively reduce the risk of property damage and, consequently, insurance rates in high-danger-risk areas.

Perez said that state insurance regulations can help with insurance costs. “State insurance commissioners have been doing a great job of representing consumers and balancing insurance affordability with availability; as a result, Pennsylvania’s remain some of the most affordable rates in the country.”

The Federal Insurance Office at the U.S. Department of the Treasury hosted a roundtable discussion focused on opportunities to address the cost and availability of homeowners insurance earlier this month. The FIO roundtable brought together representatives from various sectors, including insurers, reinsurers, state regulators, resilience and consumer groups and academics. Perez represented NAR at the roundtable where they discussed rising insurance costs, cost and availability issues and public policy solutions.

NAR is spearheading a coalition of housing, lending and insurance groups to support federal legislation which would help homeowners strengthen their homes against natural disasters, which would help lower insurance costs and improve the availability of home insurance.