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Senate Panel to Hear Extending Flood Insurance Program This Week

September 20, 2010
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The National Flood Insurance Program (NFIP) is set to expire on Sept. 30, just as the 2010 Atlantic Hurricane Season reaches its height.

The House has already passed an extension, while a Senate panel is slated to hear a bill this week. But insurers are anxious and urging Congress to take immediate action to reauthorize the federal insurance program.

“Congress returned from recess … and there is still not a clear path for the NFIP reauthorization,” said Ben McKay, senior vice president of federal government relations for the Property Casualty Insurers Association of America (PCI). “We are very concerned that this will lead to another NFIP lapse.”

In July, the House of Representatives passed a measure extending the program for five years. The Senate Banking Committee has scheduled a hearing on NFIP reauthorization for this week on Wed., Sept. 22.

The House bill, H.R. 5114, the “Flood Insurance Reform Priorities Act of 2010,” sponsored by Rep. Maxine Waters (D-Calif.) and Rep. Barney Frank (D-Mass.), has the support of the Independent Insurance Agents & Brokers of America and the National Association of Professional Insurance Agents (PIA National).

Insurers hope the Senate will follow the lead of the House, although insurers want lawmakers to strike a provision in the House bill eliminating anti-concurrent clauses from flood policies.

According to PCI’s McKay, Rep. Gene Taylor (D-Miss.) succeeded in attaching a concurrent causation amendment to the House flood bill that could make private insurers pay for the obligations of the federal government. “Ultimately, the language Rep. Taylor added would prove unworkable, and we will work to convince the Senate to remove this troublesome language. But it is never a good idea to throw out three-quarters of a loaf of good bread, and overall, we are pleased that the House has taken a much-needed step toward extending and preserving the NFIP,” McKay said in July.

Since 2008, NFIP has been operating under a series of short-term extensions. This year alone, Congress has already allowed the program to lapse four times. During these lapses, new flood insurance policies could not be written, leaving homeowners vulnerable and delaying thousands of real estate transactions per day in flood-prone regions.

On July 2, President Obama signed into law the latest short-term NFIP extension following a four-week program hiatus. The NFIP is now set to expire again on Sept. 30.

In addition to urging a long-term extension of NFIP, the industry and others want Congress to reform the program to address its more than $18 billion debt. The interest alone on this debt is almost $1 billion a year, according to PCI.

Academy of Insurance Class on Flood Insurance

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