President Signs Flood Insurance Extension But Government Shutdown Could Limit Operations

On Friday, December 21, 2018, President Trump signed into law a measure reauthorizing the National Flood Insurance Program until May 31, 2019. The flood program was set to expire at midnight on Dec. 21.

However, the partial federal government shutdown that went into effect on Dec. 22 could affect the NFIP’s operations until full staffing and government operations are restored.

Staffers in the office of Sen. John Kennedy, (R, La.), sponsor of the NFIP extension, believe the extension approved by Congress and Trump should avoid disruptions to the flood insurance program through the shutdown, although Federal Emergency Management Agency (FEMA) has not confirmed that.

Based on the government’s response to previous shutdowns, payment of current claims by the National Flood Insurance Program will continue; however, in past shutdowns the NFIP as stopped issuing new and renewing existing flood policies. FEMA has not responded to a request for clarification.

Also, based on past shutdowns, FEMA, part of the Department of Homeland Security, is expected to continue any disaster efforts it has underway. If there is a major disaster where states needed assistance, FEMA could be called on for help.

It is not clear how long the partial shutdown will be. Congress has adjourned until after Christmas.

The short-term NFIP extension, one of many since 2017, was applauded by insurance agents even though, once again, it meant Congress was not addressing reforms and longer-term authorization.

“While the need to reform the NFIP is pressing, it is necessary to extend the program to provide stability to the millions of policyholders who rely on it, and to allow the 116th Congress time to build consensus on program reforms,” said Charles Symington, senior vice president of external, industry and government affairs for the Independent Insurance Agents & Brokers of America.

Risk managers are also hoping for a longer-term approach from the next Congress when Democrats will control the House.

“Business leaders, especially those located in areas of the country most susceptible to flood disasters, can breathe a sigh of relief knowing that a NFIP lapse has been avoided,” said RIMS CEO Mary Roth. “While RIMS is happy that the NFIP received an extension, the Society will continue to work diligently with elected officials, offering our support to help create a more permanent, long-term solution.”

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