The U.S. Senate passed a temporary extension of the National Flood Insurance Program (NFIP) and President Barack Obama signed the legislation into law just few hours before the program was set to expire yesterday.
The NFIP extension was passed as a Continuing Resolution (CR) by the Senate as part of the House-Senate Conference Report on H.R. 2918, the “Legislative Branch Appropriations Act 2010.” The extension will expire Oct. 31, 2009.
“It is alarming that the NFIP, which was set to expire at midnight yesterday, came within a few hours of leaving millions of homeowners and small businesses unprotected,” says Robert Rusbuldt, Big “I” president and CEO. “Had the program been allowed to expire, it would have resulted in no more new or renewed flood insurance policies and millions of consumers would have been left without flood insurance coverage.”
Insurers were also pleased with the passage of the NFIP extension, noting that allowing the program to expire would have very negative consequences for policyholders and also for the nation’s economy. Most home buyers use federally backed mortgages to purchase property, and such mortgages are prohibited by law for homes in floodplains without flood insurance.
It is crucial to home buyers and our economy at large to ensure the NFIP remains in business, said David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI).
While agents and insurers alike thanked Congress and the president for passing another short-term extension, industry groups say long-term reforms to the NFIP are a must.
“We appreciate last night’s action by Congress and President Obama for another short-term extension but feel that a long term extension coupled with reform of the NFIP are necessary,” says Charles E. Symington Jr., Big “I” senior vice president for government affairs. “In particular, we strongly support an increase in maximum coverage limits and the addition of optional business interruption insurance.
Agents say homeowners and businesses need both higher coverage limits and business interruption insurance in order to properly insure their homes and businesses. “We hope that as Congress considers a long term reauthorization soon, they will include these reforms,” Symington added.
Insurers represented by PCI say that while long-term reforms to the NFIP are needed, adding coverage such as windstorm insurance, is not necessary.
“We will work closely with the House and Senate to advocate a long-term extension that ensures the program’s fiscal soundness and does not needlessly expand its scope into other areas, such as windstorm insurance, where coverage is already available through private industry or state programs,” Sampson said.
Another short-term extension was signed by President Obama just hours before the program was set to expire earlier this year. In the 110th Congress, the Flood Insurance Reform and Modernization (FIRM) Act of 2007 made progress in the House and Senate. The legislation would have extended the program for five years and made significant and needed reforms to help put the program on sound financial footing. This summer, similar legislation was introduced in the House of Representatives.
Sources: IIABA, PCI