NFIP Plot Thickens

The National Flood Insurance Program (NFIP) may be heading for another lapse, subsumed in high-stakes political brinkmanship.

While the situation is highly fluid, the program's source of funding, a Continuing Resolution passed in November, is set to expire tomorrow, and the issue has become inextricably linked with the larger political tussle over taxation and budget cuts.

Earlier this week, the house included a five-year extension of the NFIP in H.R. 3630, a larger bill that also extends the payroll tax holiday, reforms and extends unemployment insurance benefits, but bears the threat of a presidential veto. The five-year extension echoes the Flood Insurance Reform Act of 2011, which passed the House in July and seeks to overhaul the debt-ridden program by remapping flood plains and charging actuarially sound rates to homeowners. The Senate, which failed to produce a companion piece of legislation, instead approved a six-month extension earlier this month.

A source close to the situation tells Insurance Networking News that with legislators and the Obama Administration actively jockeying for political advantage on the tax issue, much of the information regarding the fate of the NFIP is ephemeral or residing in the realm of conjecture. Nonetheless, one scenario presented is that the House is working to craft its own six-month extension which will likely be in a smaller, cleaner appropriations bill that both chambers are set to vote on Saturday, the source says. With the President's signature affixed later in the day, disruption to the NFIP would be limited to the wee hours of Saturday morning.

Conversely, the source adds, a separate bill that includes the 5-year extension as well as payroll tax and unemployment benefits could be voted on later in the weekend. If this bill passes it will supersede any earlier legislation and may likely elicit a veto, prolonging the NFIP lapse.

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