Flood Insurance Program to Expire Again May 31

May 28, 2010

For the fourth time in the past year, the nation’s flood insurance program will lapse because Congress has not voted to reauthorize it.

That’s the latest on Capitol Hill, according to property/casualty lobbyists and other sources.

As a result, the National Flood Insurance Program will lapse at 12:01 a.m., June 1, the first day of the hurricane season.

According to the American Insurance Association, the House of Representatives was expected to strip the flood insurance provision from a larger bill dealing with unemployment benefits, Medicare payments to doctors and tax breaks that has been stalled by partisan fighting. The plan was to then conduct votes on extensions for the NFIP and other programs prior to adjourning for the Memorial Day recess.

However, according to AIA, Senate Majority Leader Harry Reid, D-Nev., announced last night that the Senate will not consider the legislation to extend the insurance and other programs until the week of June 7.

Dow Jones Newswire and The Washington blog, The Hill, reported that Democrats might make an offer to extend the NFIP and other programs for 14 days but that Republicans would only go along if stimulus finds were used to pay for it, something Democrats have opposed in the past and are expected to again.

The stalemate means the Senate will adjourn for the Memorial Day recess without taking action needed to extend the NFIP.

“This is now the fourth time Congress will have let this program lapse and it’s beginning to feel like Groundhog’s Day. The country has seen record flooding this spring. Congress needs to pass a long-term extension because homeowners living in flood prone regions of the country don’t have anywhere to turn should another major flood occur during this Congressional recess,” said Blain Rethmeier, spokesman for the American Insurance Association.

NFIP has previously issued a memo with guidelines for operations during a hiatus. During its suspension, agents will not be able to issue any new or renewal flood insurance policies or increase limits on any existing policies. The hiatus will not affect claims paying. The program insures more than 5 million properties

Congress has been working on longer-term legislation to authorize NFIP for up to five years, which would be welcomed by the insurance industry.

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