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Congress Reauthorizes National Flood Insurance Program

When the 107th Congress adjourned November 22, 2002 without reauthorizing the National Flood Insurance Program (NFIP), the future was uncertain for independent insurance agents...
January 1, 2003

Flood Insurance Back on Track After Several Weeks in Limbo

By Kellie Bray
Director of Political Affairs
PIA National

When the 107th Congress adjourned November 22, 2002 without reauthorizing the National Flood Insurance Program (NFIP), the future was uncertain for independent insurance agents offering flood insurance policies.

NFIP is the program under which the federal government backs approximately 90 percent of the flood insurance policies in the nation and close to 100% of flood insurance coverage for individually owned properties and small-to-mid-size commercial properties.

The Federal Emergency Management Administration's (FEMA) statutory authority to issue new flood insurance policies; issue increased coverage on existing policies; and issue renewal policies ended at midnight on Tuesday, December 31, 2002. A Continuing Resolution (CR) was passed to secure funding for all federal government operations at FY 02 baseline levels until January 11, 2003, thus providing an extension of the program until Congress reconvened -- however that did not completely address the issue of new coverage after December 31.

As soon as Congress reconvened, action to reauthorize the flood insurance program began. House Financial Services Committee Chairman Mike Oxley (R-OH) and Ranking Member Barney Frank (D-MA) introduced the National Flood Insurance Program Reauthorization Act of 2003 (H.R. 11) on Tuesday, January 7, to reauthorize the program for one year with a retroactive date of December 31, 2002. The retroactive date ensures that there is no lapse in the NFIP program. The House voted by unanimous consent on Wednesday, January 8 to renew the program.

The Senate cleared an identical companion bill on Thursday, January 9 by a voice vote. President Bush signed it into law on January 13, 2003.

How Did This Happen?

Basically, Congress left town in December without officially reauthorizing the flood insurance program. This was a problem -- but not a big one.

NFIP is routinely reauthorized yearly by unanimous consent of the Senate and House of Representatives. On November 20, 2002 the Senate passed S. 13, sponsored by Senator Paul Sarbanes (D-MD), by unanimous consent. The House of Representatives did not pass their companion bill before adjourning two days later.

Was this a crisis? In a word, no. In all of PIA National's contacts with congressional offices, we encountered no opposition to NFIP reauthorization whatsoever. We didn't need to conduct grassroots alerts encouraging PIA members to urge their representatives to take action because Congress was already on board. Our efforts were concentrated behind the scenes.

"It's virtually assured that it will be reinstated," PIA of Louisiana President Richard "Richie" Clements said of NFIP in a December 31 interview with the Associated Press. "I don't think there's any need for panic. It's probably going to be invisible to the public."

Still, a crisis could have developed had reauthorization not been secured in a timely manner.

PIA Takes Action

While the lack of congressional reauthorization of NFIP was, in essence, merely a technical "glitch," the fact remained that statutory authority for the program to enter into new insurance contracts after December 31, 2002 would expire.

PIA National worked tirelessly to ensure the prompt, retroactive reauthorization of NFIP when Congress returned on January 7, 2003. As part of a coalition of insurance, lender, banking, housing and realtor interests, PIA lobbied Senate and House leadership to ensure quick action. At the same time, PIA National worked with FEMA and directors of the Federal Insurance and Mitigation Administration (FIMA), which administers the program, to outline the best operating practices for agents in dealing with their clients needing flood coverage during this period of limbo.

Coalition participants included the National Association of Realtors, the American Bankers Association, America's Community Bankers, the American Insurance Association, Fannie Mae, Freddie Mac, the Mortgage Bankers Association of America, the National Association of Home Builders and the Financial Services Roundtable.

This article originally appeared in the January 2003 PIA Connection.

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