As Congress returns for a shortened pre-election session that may only last a few weeks, one of the many items to be resolved is renewal of the National Flood Insurance Program (NFIP). Authorization for the program is set to expire September 30.

PIA National has been advised by FEMA that they began work last week on emergency rules and instructions for WYO/insurance producers on what will happen to NFIP business should Congress fail to at least provide a one-year reauthorization.

Background:  In May, the U.S. Senate passed legislation (S. 2284) that would extend the NFIP through 2013, phase in actuarially sound rates for nonresidential and nonprimary residences, and forgive the NFIP’s debt, estimated at nearly $18 billion. The bill also creates an executive branch overseer to police “Write Your Own” insurers, as well as an expert commission that will report to Congress on ways to address the availability of catastrophe coverage in high-risk areas.

The vote sets up a potentially contentious conference with U.S. House leaders, whose version of the legislation, the Flood Insurance Reform and Modernization Act (H.R. 3121), would offer NFIP policyholders the option to purchase multiperil coverage with limits of $500,000 for residential properties and $1 million for commercial properties. Thus, the House version adds wind coverage to NFIP while the Senate bill does not. A conference committee has been appointed to reconcile the bills.

What It Means to Agents:  All PIA members need to press their Members of Congress to act now to support at least a one-year extension of the NFIP.

PIA National supports the reauthorization of NFIP, including forgiveness of the program’s debt and the many reforms to the program that the House agreed to in the Senate version. But we do not support expansion of the program to cover wind.

September 10, 2008