The Property Casualty Insurers Association of America (PCI) applauded the Senate Banking Committee for discussing the need to reform and reauthorize the National Flood Insurance Program (NFIP) and continued to urge the House to schedule a final vote on H.R. 1309, the Flood Insurance Reform Act of 2011.
“We applaud Chairman Johnson and the Senate Banking Committee for having serious dialogue over the future of the NFIP,” said Ben McKay, senior vice president of federal government relations for PCI. “Over 5.6 million Americans rely on flood insurance. The recent floods that have devastated communities throughout the country serve as a reminder that we need a strong, stable flood program to protect homes and businesses.”
The Senate Banking Committee on June 9th convened their first flood insurance hearing during the 112th Congress. The NFIP is scheduled to expire again on September 30, 2011. In 2010, the NFIP lapsed four times and flood coverage could not be purchased or renewed for a total of 53 days. Lapses in NFIP coverage have created uncertainty in the housing market and the economy while leaving homes and businesses even more vulnerable to devastating floods.
“PCI is dedicated to working with House and Senate leaders on long-term solutions that will provide the flood program with the ability to sustain itself financially with sufficient capital to protect policyholders,” said McKay. “The flood program is currently saddled with approximately $18 billion of debt. We are pleased that the House flood insurance reform bill includes provisions to move the NFIP toward more adequate rates that will stabilize the program and reduce taxpayers’ exposure to costly relief efforts.”
H.R. 1309, the Flood Insurance Reform Act of 2011 was marked up by the House Financial Services Committee last month and could be considered on the House floor in the coming weeks. The bill reforms the NFIP and extends the program for five years. PCI strongly supports H.R. 1309 and urges House leaders to consider provisions to prevent the federal government’s role in flood insurance from increasing by 800 percent.
“The Flood Insurance Reform Act is a strong bill that takes significant steps to strengthen and stabilize the NFIP,” said McKay. “We ask that the House also consider additional language that will prevent the federal government from soon becoming the largest policy writer and servicing entity for flood insurance.”
In 2010, the 2nd largest member of the “Write Your Own” (WYO) Coalition chose to withdraw from the program that administers flood insurance, resulting in approximately 800,000 policies that will be transferred back to the federal government’s NFIP Direct program. Without congressional action, the federal government's role in flood insurance will soon increase by 800 percent, making it the largest administrator of NFIP policies. The Federal Emergency Management Agency (FEMA) recently entered into a contract to manage these policies that could otherwise be served by private sector companies. PCI urges the House to accept an amendment that will redistribute the NFIP policies to the WYO insurers in the private sector.