Buying time to craft a more lasting solution, the House of Representatives has passed another temporary extension to the National Flood Insurance Program, keeping the cash-strapped program afloat through March 31, 2010.
Legislators have not yet found common ground on whether to include coverage for wind damage in the NFIP. Opponents of a wind inclusion say that it is unnecessary, and will crowd out private-market insurers, while proponents of its inclusion counter that it is necessary to stop private insurers from shifting claims caused by wind damage to the flood program.
With an estimated $5 trillion worth of insured properties in coastal regions, all seem to agree that the program needs to continue while long-term arrangements are made.
“Clearly, we cannot allow the NFIP to expire which could be devastating to those policyholders who live in flood-prone areas and to the nation’s already weakened real-estate markets,” Kathy Mitchell, federal affairs director for the National Association of Mutual Insurance Cos. (NAMIC) said in a statement. “However, the program is in need of several critical reforms and a long-term extension so that consumers and taxpayers can have greater confidence in their investments for the future.”
Mitchell said NAMIC supports mandated updates of the nation’s flood maps, the phase-in of actuarially sound rates for non-residential and non-primary residences, and the forgiveness of the program’s estimated $19 billion debt, but opposes a provision for mandatory wind coverage.
Charles Symington Jr., SVP for government affairs for the Independent Insurance Agents & Brokers of America, agreed that it was is imperative that Congress use the six-month period to hammer out a permanent deal.
“This extension is just a temporary fix, but a significant and welcome development for the millions of homeowners and small businesses who count on NFIP as a safety net in the event of flooding,” Symington said in a statement. “If the NFIP is allowed to expire, millions of consumers will be left vulnerable the next time a flood devastates a community.”
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