With another expiration date looming in September, lawmakers are seeking another temporary extension to the National Flood Insurance Program (NFIP). Rep. Maxine Waters (D-Calif.) and House Financial Services Chairman Barney Frank (D-Mass.) introduced legislation that would continue the NFIP until March 2010.

A long term extension of the program has been held up by competing opinions on whether to include coverage for wind damage in the program. Some, including the Property Casualty Insurers Association of America (PCI) contend a wind inclusion is unnecessary and will crowd our private-market insurers. Others, including Rep. Gene Taylor (D-Miss.) whose district was pummeled by Hurricane Katrina, say excluding wind damage enables private insurers to shirk responsibility for wind damage and shift the burden to the flood program and taxpayers. Taylor introduced The Multiple Peril Insurance Act of 2009 in March.

What both sides concur on is that any disruption of the program is not an option.

"Most home buyers use federally backed mortgages to purchase property, and such mortgages are prohibited by law for homes in floodplains without flood insurance," says PCI's president and CEO, David Sampson. "If the program were to expire, real-estate transactions in flood-prone areas would come to a halt. We cannot afford to compound the economic challenges our nation already faces by allowing the NFIP to lapse."

It also widely acknowledged that the extension merely delays a reckoning.

"While this extension does not fix the NFIP's problems, it does help those living in flood-prone areas by making sure coverage continues to be available," says Leigh Ann Pusey, president and CEO of the American Insurance Association. "A short term extension to keep the federal flood program in place is the most prudent action for Congress to take."

Waters and Frank say they hope their bill attracts bi-partisan support, and that they want to consider additional recommendations before drafting new legislation. John Prible, AVP for federal government affairs for the Independent Insurance Agents & Brokers of America, says the association would like to see both higher coverage limits and business interruption insurance in a future version of the bill. "We hope that as Congress considers a long term reauthorization soon, they will include these reforms in legislation," Prible says.

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