Posted on 20 Sep 2010
As the 2010 Atlantic Hurricane Season reaches its height, the National Flood Insurance Program (NFIP) is set to expire in ten days, on September 30. Now that Congress has reconvened, the Property Casualty Insurers Association of America (PCI) urges immediate action and reauthorization of the NFIP.
"Congress returned from recess this week and there is still not a clear path for the NFIP reauthorization," said Ben McKay, senior vice president of federal government relations for PCI. "We are very concerned that this will lead to another NFIP lapse in fourteen days.”
Since 2008, NFIP has been operating under a series of short-term extensions. This year alone, Congress has already allowed the vital program to lapse four times. During these lapses, new flood insurance policies could not be written, leaving homeowners vulnerable and delaying thousands of real estate transactions per day in flood-prone regions.
The NFIP provides 5.5 million Americans with vital protection from devastating floods associated with hurricanes, tropical storms, heavy rains and other conditions that impact the U.S. Standard homeowners insurance does not cover flooding and must be purchased through the NFIP. Real estate closings across the nation are delayed during these NFIP hiatus periods for purchasers who are required to obtain flood coverage under federally-backed mortgage requirements.
Floods are the most common natural disasters to occur in the United States. With over $18 billion in debt, the NFIP is a program that needs meaningful reform. The interest alone on this debt is almost $1 billion a year. On July 2, President Obama signed into law the latest short-term NFIP extension following a four-week program hiatus. The NFIP is now set to expire again on September 30, 2010.