Spring Flooding Renews Concerns over National Flood Insurance Program Expiration

For agents across much of the Northeast, the last several months have brought spates of spring flooding — and has served as a reminder for what is poised to become a political battle this fall over frequent lapses and extensions of the National Flood Insurance Program (NFIP).

Last summer, after a month-long lapse, the NFIP was given a year-long extension, which will expire on September 30. That last extension followed several earlier expirations of the program, which left buyers and sellers up in the air as they waited for flood coverage to become available, since it’s typically required for mortgaged homes.

It took care of the problem for the time being, but agents say they are hard at work urging federal lawmakers to change the NFIP. Among the biggest improvements agents would like to see: expanded coverage and better pricing.

“It creates a lot of uncertainty when there are expirations and extensions,” said Spencer Houldin, president of Ericson Insurance Advisors in Connecticut, where spring flooding in March took out roads and damaged houses. “When it happens closing aren’t able to take place and coverages can’t be increased. It can create claims questions and it ends up being a lot of work for agents because — from and E&O standpoint — agents should notify clients that there is a potential stop.”

The availability of coverage needs to be re-examined, he said. The limits on dwellings ($250,000 on residential and $500,000 on commercial) haven’t been changed in decades and coverage such as business interruption and loss of use are not available.

Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America (The Big “I”) said the goal should be to get a long-term extension and then focus on making the program function more like private insurance. That would include eliminating subsidies and using actuarial pricing methods, he said.

“These expirations and short-term extensions do not give the needed certainty to the market place,” Symington said. “We need to prepare the program for the future.”