Possible Lapse In NFIP—Here We Are Again!

As we've reported earlier, the 115th Congress has been unable to pass legislation to fund the NFIP for more than a few weeks or months at a time since its most recent long-term expiration date: Sept. 30, 2017. Presently, the NFIP is set to expire at midnight tomorrow—Friday, November 30th.

Members of the House are discussing a possible one-week extension of the NFIP so that it would expire on Friday, December 7th, when about 20 percent of all government agencies will also lose their funding. That would buy Congress another week to develop a government funding bill that would include the NFIP and fund the rest of the outstanding agencies/programs through the end of FY 2019.

For your convenience, click here to find the NFIP's 2017 memo on how to proceed in the event of a lapse, which FEMA has advised us will still apply.

PIA strongly supports a bill that has been introduced by U.S. Sen. John Kennedy (R-LA) that would reauthorize the National Flood Insurance Program (NFIP) before it expires. The "clean" extension bill would extend the program through the end of May, and it also has a retroactive provision for policies renewed or made during a lapse. Government funding legislation, which must be passed by Dec. 7, offers another potential avenue for an NFIP extension.

PIA has signed on to a joint industry trades letter to Congressional leadership, urging an extension and has issued a nationwide grassroots alert encouraging PIA members to contact their members of Congress and urge them to pass an NFIP extension.

FL CFO: Include Mitigation in Flood Bill

Virtual Exhibit Hall

Louisiana ranks number one on a list of least affordable states for auto insurance, according to a new study from the Insurance Research Council (IRC). One factor behind the high cost of insurance in Louisiana is the frequency of auto accidents and resulting insurance claims, the IRC said. In 2017, Louisiana had the highest bodily injury (BI) liability claim frequency in the country (1.75 claims per 100 insured vehicles, almost double the countrywide rate of 0.90 claims per 100 insured vehicles).

Another factor cited by the IRC is frequent claims and litigation, "the propensity of Louisiana claimants to hire attorneys and file lawsuits." Among 2017 BI claims, 54% of Louisiana claimants hired attorneys, compared with 48% of claimants in other states. Moreover, Louisiana claimants were 60% more likely to file lawsuits (16% compared with 10% countrywide), the IRC said.

In the last legislative session, a bill was passed to create the High Auto Insurance Task Force, which PIA's Immediate Past President Lou Fey sits on this task force as the PIA of Louisiana representative. This task force, chaired by House Insurance Committee Chairman Kirk Talbot has met a few times since forming with the goal of introducing legislation in the 2019 Legislative Session to address this issue. We'll keep you updated as work evolves.

Private equity deal makers are pushing buyout values to levels not seen since 2007, as they ride a wave of cheap debt, according to a report in the Financial Times. Although the deals may not be as large in the last buyout bubble, today's deals are again fueled by supersized portions of cheap debt, with few strings attached. In about half of this year's deals, private equity firms were able to raise debt financing up to at least six times the annual earnings before interest, tax, depreciation, and amortization of the company they bought.

This is starting to raise alarm bells. Janet Yellen, the former chair of the U.S. Federal Reserve, told the Financial Times last month that she was worried by a "huge deterioration" in corporate lending standards, particularly for leveraged loans. The International Monetary Fund (IMF) has also singled out leveraged loans as a potential source of financial instability.