Posted on 30 Mar 2010
The National Association of Professional Insurance Agents (PIA) has expressed disappointment that Congress adjourned on March 26 after failing to extend the authorization for the National Flood Insurance Program (NFIP).
"Once again, Congress has allowed the National Flood Insurance Program (NFIP) to lapse, this time for at least two weeks," said PIA National President-elect Brian Marino, co-chair of the association’s working group on natural catastrophes. "This leaves all of those who were about to close on property where flood insurance is required as a condition of a mortgage unable to go to closing for the at least the next two weeks. This is no way to revive the real estate market. It has the opposite effect."
As a result of Congress’ inaction, the federal flood insurance program’s authority to write new policies ended on Sunday, March 28 at midnight. Until a reauthorization is passed, insurance agents will not be able to provide new or renewal flood insurance policies required by lenders to close on some real estate sales. A similar hiatus occurred at the end of February when the program lapsed for two days until Congress renewed it on March 2. But this time, the hiatus will be longer as Congress is not scheduled to re-convene until April 12. At that time, it is expected to renew the NFIP retroactively. While no new policies can be issued during a lapse in NFIP authorization, consumers with current flood insurance policies remain covered. Claims payments are not affected.
The extension was attached to a Senate bill extending unemployment benefits, which was filibustered. “This was not appropriate, because flood insurance is not an entitlement program, it is funded by the premium payments of those purchasing flood insurance,” Marino said. “When lawmakers return from their current recess, they should immediately extend the flood insurance program for one year to restore stability to our real estate markets and then schedule hearings this year on comprehensive reforms to the NFIP, which lead to a reauthorization of at least five years. Congress needs to stop playing games with this.”
“We’ve just experienced one of the most severe winters in our nation’s history and we are now headed into the spring flooding season,” Marino said. “The snow is melting, the rivers are rising and Congress is leaving its constituents unprotected.”