On Friday, November 18, both the Senate and the House approved by voice vote legislation that raises to $18.5 billion the amount the National Flood Insurance Program (NFIP) can borrow from the Treasury every year. 

The action addresses the immediate funding crisis that prompted the NFIP on November 11 to send a notice to all of the Write Your Own (WYO) carriers participating in the NFIP that grants of additional credit authority were being suspended, pending Congressional action.

The flood program director, David Maurstad, has warned that claims from Hurricanes Katrina and Rita could top $22 billion, and previously asked for a $5 billion increase just to get the program through November. House Financial Services Committee Chairman Mike Oxley, (R-Ohio) had cautioned that claimants could “initiate legal actions against FEMA and the United States government if we do not act now.”

PIA’s initial grassroots action to urge Congress to extend the borrowing authority of the National Flood Insurance Program (NFIP) was a success!  On Friday, November 18, both the Senate and the House voted an emergency authorization increasing the NFIP’s borrowing authority to $18.5 billion—a $15 billion increase over current levels. “PIA thanks the members of the House and Senate for recognizing the urgency of this situation by taking this action,” said PIA National Senior Vice President Patricia A. Borowski.

What It Means to Agents:  The immediate threat to the ability of the NFIP to pay claims has been removed by Congress’ action. The increase in borrowing authority was dealt with as a separate emergency action, leaving NFIP reform proposals still to be dealt with in separate legislation either when Congress reconvenes after Thanksgiving, or next year.

When Congress returns to work, it is expected to consider legislation that would increase NFIP borrowing authority by an additional $4.5 billion, and at the same time enact reforms to the program. Funds available through this additional credit extension will be applied to additionally anticipated costs in the nation’s flood insurance program.

On November 15, PIA sent an updated series of proposals addressing NFIP reform to the members of the House Financial Services Committee, while reiterating that the funding extension must be dealt with on an emergency basis. PIA National Senior Vice President Pat Borowski held discussions with committee staff on that day. The proposals build on those PIA already submitted to a subcommittee of the House Financial Services Committee on October 20, and to the Senate Banking Committee on October 18.

PIA – NFIP Action Alert! (updated 11/21/05) 

Congress OKs Flood Insurance Borrowing (Washington Post 11/19/05) 

House Panel Acts To Bolster Flood Program (National Underwriter 11/17/05)

PIA Lauds House Approval of NFIP Borrowing (Yahoo 11/16/05)

November 22, 2005