According to an insurance industry lobbyist, the National Flood Insurance Program, which is set to expire Sept. 30, could face new funding threats as Congress looks for budgetary cuts.
“This will be a huge issue for us,” Ryan Young, senior director of federal government affairs for the Independent Insurance Agents & Brokers of America (Big I) said at a Virginia Day on the Hill legislative update in Richmond, Va.
Congress has agreed to work within its current budget, meaning for the most part that any program that costs money must be balanced with cuts to another program. Congress has said its intent is to stop adding to the federal deficit, which stands at $14 trillion.
The NFIP, according to Young, could be an appealing target for legislators, especially in the U.S. House of Representatives, where Republicans won a majority in the 2010 midterm elections.
“A lot of legislators will wants to cut budgets, and that could put the flood insurance program in a bad position,” Young said.
The flood insurance program, which provides about 5 million homeowners in the U.S. with insurance coverage against flood, had three short-term extensions in 2010, but not before it lapsed twice. When lapses occur or are threatened, insurance agents say the volume of calls they receive goes way up as property owners worry whether they can buy or sell their properties, or are protected against a flood. When the two lapses occurred last year, property sales were delayed.
While Congress’ renewals of funding to the program were always retroactive, lawmakers have not agreed to a long-term extension. Until 2009, the program had always been extended in five-year increments, making it less troublesome for agents and homeowners, most of whom cannot buy or sell properties in flooding areas without the coverage.
“We are pushing for a long-term extension for it,” Young told members of the Independent Insurance Agents of Virginia and the Virginia chapter of the National Association of Insurance and Financial Advisors (NAIFA).
A bill to extend the program for five years failed last year, when Democrats had a majority in both the House and Senate.