Chicago – The Property Casualty Insurers Association of America (PCI) is urging Congress to reauthorize the National Flood Insurance Program (NFIP) before it expires on Sept. 30, 2008 to avoid putting homeowners in flood-prone areas at risk.
As Hurricane Ike bears down on the Gulf Coast, and as other storms have highlighted the devastation associated with flooding, it is imperative for Congress to come together and reauthorize the program. PCI applauds the bipartisanship leadership displayed on this issue as the legislation has evolved thus far, but if the House and Senate do not pass identical bills for a presidential signature by September 30, the flood program will expire.
“The National Flood Insurance Program offers vital protection to policyholders nationwide, and it is critically important to Americans and the U.S. economy,” says David Sampson, PCI’s president and CEO. “Floods are the most common natural disasters to occur in the United States, and the NFIP provides 5.5 million taxpayers with needed flood insurance coverage. Congress should reauthorize the NFIP now.”
If Congress fails to reauthorize the NFIP, the federal government will still be called upon to provide aid to taxpayers following significant flooding events, but it will not have the support of more than $2.85 billion in annual premiums paid by flood policyholders. In addition, inaction on this issue likely will mean that economic community development and post-flood recovery efforts will be greatly hampered, and real estate transactions involving properties with federally backed mortgages will be prevented from entering the closing process.
“Congress cannot allow the program to expire for even a short time, as issues with stopping renewals, reissuing policies and forestalling real estate closing transactions will be costly for consumers and businesses,” says Sampson. “Also, a lapse in the program would come during hurricane season, a risky time for homeowners to be without flood insurance, as we have seen with the heightened storm activity this season.”
The flood program does more than provide insurance coverage. According to the Federal Emergency Management Agency, more than 20,000 communities now participate in the program, and many have adopted floodplain management ordinances in efforts to reduce future flood damage. The availability of federally backed insurance is proving to be a strong incentive for communities to enforce sound land use policies and floodplain management.
The NFIP has proven to be a strong and valuable program; however, PCI believes it is in need of reform and should be updated to reflect today’s risks. PCI supports the bill passed by the Senate, S. 2284, which does not add wind insurance to the flood program. PCI has concerns, however, with language added to the bill that creates an insurance advocate. Multiple options already exist for policyholders to address concerns with the claims handling process, thereby making an insurance advocate redundant and unnecessary.
With some updates, PCI urges lawmakers to recognize the importance of the bill and make reauthorization a top legislative priority as they continue to work for consumers and communities across the country.
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