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Once Again, NFIP Authorization About to Expire

In what has become a recurring nightmare for homeowners and the independent insurance agents who serve them, we are once again just days away from...
December 9, 2009

In what has become a recurring nightmare for homeowners and the independent insurance agents who serve them, we are once again just days away from seeing the authority for the National Flood Insurance Program (NFIP) expire.

Congress approved an extension of the NFIP on October 30 as part of a continuing resolution to temporarily maintain current spending. The extension was through December 18.

Efforts to enact comprehensive reforms to the NFIP have been stymied in recent years over two issues: proposals to add coverage for wind damage to the flood program and forgiving the nearly $20 billion debt amassed by the program as a result of catastrophic storms in 2004 and 2005. PIA opposes inclusion of wind coverage in the NFIP program and supports debt forgiveness. Also delaying action on NFIP reforms is the fact that Congress in the middle of dealing with health care reform, leaving little time for anything else.

Rather than extending NFIP for a longer period such as six months, so reforms can be sufficiently debated, Congress has been waiting until the last minute before passing these short-term, stop-gap extensions. This is unacceptable. Many mortgage lenders require flood insurance before real estate closings can occur. When Congress creates this air of uncertainty, it triggers additional legal obligations concerning notice to consumers and current NFIP policyholders about the pending lapse. Congress needs to stop playing Russian roulette with the nation's real estate market and consumer confidence by granting such short extensions to the NFIP.

What It Means to Agents:  NFIP continues at least until December 18, when Congress will need to pass another extension. When that happens, the extension should be for at least six months, to allow sufficient time for hearings on a comprehensive NFIP reform bill.

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