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Agreement Will Extend National Flood Insurance Program for Five Years

Source: BestWire

Posted on 29 Jun 2012 by Neilson

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Flood programNegotiators from the U.S. Senate and House of Representatives have reached an agreement that will extend the National Flood Insurance Program for five years.

The Senate Banking, Housing and Urban Affairs Committee said it attached the NFIP bill to a transportation conference report. Both the Senate and House need to vote on the agreement, which is expected to take place before week's end, according to Matt Brady, spokesman for the National Association of Mutual Insurance Companies.

Brady said the language in the agreement sticks closely to what had been considered in both houses. The legislation, if passed, would be a win for the property/casualty industry in Washington.

Matt Gannon, assistant vice president of federal affairs for NAMIC, said one portion of the original NFIP bill, which dealt with residual risk, did not make it into the agreement. If left in, the section would have created new requirements for mandatory flood insurance for federally backed mortgages in areas that are considered a flood risk, but behind dams and levees, Gannon said.

The American Insurance Association said in a statement it liked the progress that took place.

AIA continues to advocate for a long-term reauthorization of the NFIP that contains much-needed reforms and is pleased with the direction in which things are currently headed," spokesman Willem Rijksen said in an email. "A five-year extension with reforms including movement toward risk-based pricing and elimination of premium subsidies will not only protect the programs fiscal soundness, but the 5.6 million policyholders it's meant to serve.

The agreement breaks a political logjam that had held up passage of a long-term reform bill for months. The program will now expire on Sept. 30, 2017, according to the agreement. It had been operating under a 60-day extension signed by President Barack Obama in May, but would have expired on July 31 without additional action.

A late amendment added by Sen. Rand Paul, R-Ky., to the Senate's NFIP bill threatened to derail negotiations. Paul's amendment would have defined life as beginning at conception and grant 14th Amendment equal protection rights to unborn fetuses (Best's News Service, June 27, 2012).

Industry trade groups have argued that without a long-term extension to the NFIP that includes significant reforms to the program, homeowners, insurers and real estate providers are left operating in an environment where there is little certainty.