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PIA Praises Flood Insurance Extension, But Says It's Too Short

Source: PIA National

Posted on 02 Nov 2009

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The National Association of Professional Insurance Agents (PIA) praised the extension through December 18 of the authorization for the National Flood Insurance Program (NFIP), while expressing disappointment with the short duration of the extension.

Congress approved an extension of the NFIP on October 30 as part of a continuing resolution to temporarily maintain current spending. The resolution was approved by the House and Senate as part of an appropriations bill for the Department of the Interior, and is expected to be signed by President Obama Saturday when the previous continuing resolution expires to keep the federal government operating.

“These stop-gap, short term extensions to the NFIP are due to the fact that a comprehensive reform measure is still awaiting action, but has been crowded out of the Congressional calendar by more pressing matters,” said PIA National Director of Federal Affairs Mike Becker.

“Many mortgage lenders require flood insurance before real estate closings can occur,” Becker said. “When Congress creates this air of uncertainty, it triggers additional legal obligations concerning notice to consumers and current NFIP policyholders about the pending lapse. Congress needs to stop playing Russian roulette with the nation’s real estate market and consumer confidence by granting such short extensions to the NFIP.”

Efforts to enact comprehensive reforms to the NFIP have been stymied in recent years over two issues: proposals to add coverage for wind damage to the flood program and forgiving the nearly $20 billion debt amassed by the program as a result of catastrophic storms in 2004 and 2005. PIA opposes inclusion of wind coverage in the NFIP program and supports debt forgiveness.

Homeland Security Secretary Janet Napolitano, in a letter to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, which has jurisdiction over the flood insurance program, expressed the Obama administration’s opposition to adding wind coverage to the flood program. “Voluntary federal wind coverage would create significant problems involving coordination of benefits and adversely affect competition and selection among the various public and private wind programs,” Napolitano said.

“While we are heartened that the flood program was not allowed to slip into a technical lapse, these short extensions are insufficient to maintain certainty in the market,” said Becker. “Congress has a lot on its plate at the moment and since lawmakers don’t have time to conduct hearings on reforms to the flood program, the program should be extended for at least another six months so that hearings can be held in a sufficiently deliberative manner.”