IN THE WORKS IN WASHINGTON reauthorization bill . As Perez noted , “ NFIP affordability continues to be a focal point of discussion in Congress ; now that Risk Rating 2.0 reveals the true cost of insuring certain properties in the NFIP , perhaps members of Congress will be able to come together around an affordability pilot program that addresses many differences .”
Additionally , with the continued changing of our climate , large flood events are becoming both more frequent and severe . According to the National Oceanic and Atmospheric Administration , as of October 2021 , the U . S . experienced 18 weather disasters exceeding $ 1 billion in losses in 2021 . The United States annually averaged 7.1 such disaster events annually between 1980-2000 . In contrast , between 2016-2020 , the country averaged 16.2 such events annually . As Maurstad noted in his statement submitted for the NFIP Senate hearing , “ The historic 2020 hurricane season started earlier than ever , saw the most storms in the shortest amount of time in history , and finished with a record-breaking 30 named storms . Every mile from Texas to Maine was under a storm surge .” These intensified climate risks make flood insurance even more critical to many property owners .
Private flood insurance is also on the rise . Regulations issued in 2019 have further encouraged the private flood insurance market as they require regulated lending institutions to accept private flood insurance policies that meet certain criteria . While NFIP coverage is limited to a maximum of $ 500,000 for building-only coverage per commercial property , extra coverage can be added to the program . NAR and CCIM Institute will continue advocating for a long-term reauthorization bill with sensible reforms both to protect property owners and to help ensure the long-term solvency of the National Flood Insurance Program .
PANDEMIC RISK FRAMEWORKS Congress has been working since the start of the pandemic on how to address the immense financial losses sustained by many businesses . The Senate Banking Subcommittee on Securities , Insurance , and Investment discussed possible legislative frameworks to address future pandemic risk at a hearing this summer . During his opening statement , Senator Robert Menendez , D-N . J ., noted that , “ the National Association of Insurance Commissioners found that of the eight million businesses with commercial insurance policies that included business interruption coverage , 83 percent also included a clause excluding claims from viral contamination , disease , or pandemic . Unsurprisingly , 82 percent of claims have been closed without payment .” Instead of business interruption coverage , most businesses had to rely on relief provided by the federal government such as the Paycheck Protection Program and the expanded Small Business Administration Economic Impact Disaster Loan program .
Congress is considering different frameworks to address the issue of pandemic-induced business interruption losses , because pandemic loss is too big to privately insure . During the Senate hearing , Evan Greenberg , CEO and chairman of Chubb , noted that “ pandemics , unlike other catastrophes such as earthquakes , hurricanes , and
Congress faces many urgent issues as the world continues to address and recover from the pandemic . Hopefully , members of Congress will compromise on points of contention and come together in a bipartisan spirit to tackle the diverse policy challenges facing our country .
floods , are not limited to a specific geography or time period and can affect entire economies and most of the population at the same time . This results in losses so great that the event is uninsurable for business interruption coverage by the insurance sector alone .” Congress is considering frameworks for a pandemic risk insurance program , which would create a pandemic federal reinsurance backstop like the current one for major acts of terrorism . This framework is one of many legislative approaches being discussed . In November , Representative Carolyn Maloney , D-N . Y ., reintroduced the Pandemic Risk Insurance Act , which would create such a pandemic federal reinsurance backstop . The Senate is likely to introduce its own version of the bill in the upcoming months . Congress will likely continue to consider the various approaches proposed to enhance access to affordable business interruption coverage during future pandemics .
CANNABIS BANKING LEGISLATION Cannabis , for either recreational or medicinal use , is currently legal in most states . For businesses operating lawfully in those states , accessing financial services proves challenging because cannabis continues to remain an illegal substance at the federal level . Last year , the U . S . House passed the Secure and Fair Enforcement ( SAFE ) Banking Act , and it is now awaiting consideration in the Senate . The House has passed the legislation five times since 2019 , and it has bipartisan support in both chambers of Congress .
The legislation would remove the barrier to accessing financial services by providing a safe harbor to banks , insurance companies , and other financial institutions that serve cannabis businesses operating lawfully in states where marijuana is legal . As Representative David Joyce , R-Ohio , cochair of the Congressional Cannabis Caucus explained in a House floor speech last April , “ Cannabis companies are not afforded the same access to financial services as every other legal business in our country .” The lawfully operating cannabis industry is growing exponentially , and passage of the SAFE Banking Act would improve access to capital and banking services to these businesses .
Despite strong bipartisan support , the bill faces opposition without broader cannabis criminal justice reform . Several senators have expressed their preference for including the SAFE Banking Act ’ s provisions as part of a larger cannabis reform bill . As Senator Cory Booker , D-N . J ., explained when asked about the passage of the SAFE Banking Act without inclusion in a larger reform bill , “ To me , it wouldn ’ t be a win . It would be a setback for expunging the records of all the people who are waiting for some kind of justice .” Other lawmakers have also expressed preference to include the bill with a cannabis reform effort .
Congress faces many urgent issues as the world continues to wrestle with the pandemic . Hopefully , members of Congress will compromise on points of contention and come together in a bipartisan spirit to tackle the diverse policy challenges facing our country .
Elizabeth Vincent Government affairs consultant with experience in CRE .
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