Congress has agreed to increase the borrowing authority of the federal program overseeing flood insurance to cope with the huge expected costs of claims from Hurricane Katrina.
The Senate, by voice vote, approved a House-passed bill that would allow the National Flood Insurance Program, a wing of the Federal Emergency Management Agency, to borrow up to $3.5 billion a year from the Treasury, up from the current ceiling of $1.5 billion. The legislation now goes to the president for his signature.
The program, established by Congress in 1968, currently covers around 4.5 million policyholders in more than 20,000 communities located in flood plains and other low-lying areas.
Participation is based on agreements between local communities and the NFIP under which the program offers protection at lower than full-risk rates in exchange for commitments from the communities that they will carry out steps to reduce flood damage risks in new structures.
The program is generally financed by premiums, but officials say it is certain that it will need substantial assistance to handle the hundreds of thousands of expected claims from Katrina. The program has paid $12.7 billion in flood insurance claims and related costs since 1969.
The bill is H.R. 3669.
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