National Flood Insurance Program Set to Expire Tomorrow
The U.S. Senate has yet to approve a measure extending the nation’s flood insurance program, which expires tomorrow.
While the U.S. House of Representatives passed an extension to the National Flood Insurance Program (NFIP) through September 2009 under the omnibus spending bill on Feb. 25, the Senate continues to debate the bill’s passage even though the NFIP extension is set to expire at 11:59 p.m. on March 6. After that, agents and brokers will no longer be able to write, renew or endorse NFIP policies.
John Prible, government affairs for the Independent Insurance Agents and Brokers of America, says the omnibus bill funding is currently being debated in the Senate but there’s “a little game of chicken” happening between the House and Senate on any changes that may be made to the ominbus bill in the Senate. The debate could potentially derail the bill, he said.
The Senate could take another route to avoid a flood insurance shutdown if it doesn’t pass the omnibus measure, according to Prible.
“Congress should pass a CR (Continuing Resolution) to temporarily fund the federal government that would include a short term flood extension,” Prible wrote in an e-mail to Insurance Journal. “We’ll know for sure tonight or tomorrow.”
Authorization of the flood insurance program was extended last fall until March 6, 2009. The latest extension would extend it through the end of the current fiscal year.
“This extension means that property owners across the country who need flood insurance coverage will continue to be able to obtain it while the NFIP reform process proceeds,” said Bill McGraw, co-chair of the Professional Insurance Agents’ National Natural Catastrophe Working Group.
Even so, improvements to the NFIP rather than another extension, would be preferred, industry groups say.
“Much work remains to be done in order to improve the NFIP for the benefit of consumers,” said Brian Marino, co-chair of the PIA National Natural Catastrophe Working Group. “Local communities, the states and the federal government all have a stake in making the flood insurance program work better for property owners and our nation’s economy.”
“While it would be preferable for Congress to pass a long-term extension with much-needed flood program reforms, we understand that the best that can be done right now is to make sure the NFIP does not lapse,” said David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI). “Expiration of the program could have dire consequences, not just for policyholders but also for the nation’s economy in general,” Sampson added.
Most home buyers use federally backed mortgages to purchase property, and such mortgages are prohibited by law for homes in floodplains unless they have flood insurance. If the program were to expire, real-estate transactions in flood-prone areas would come to a halt, Sampson said. “We cannot afford to compound the economic challenges we already face by allowing the NFIP to lapse.”
Sources: PIA, PCI, IIABA