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FEMA, WYO Carriers to Discuss NFIP Privatization

The Federal Emergency Management Agency (FEMA) plans to invite the ten CEOs of companies participating in the "write your own" (WYO) flood insurance program to...
December 14, 2010

The Federal Emergency Management Agency (FEMA) plans to invite the ten CEOs of companies participating in the "write your own" (WYO) flood insurance program to a round-table discussion "of the actions needed for the private insurers to seriously consider bearing the risk for some or all of the flood peril," according to a letter from Edward Connor, acting assistant commissioner for mitigation. No decisions will be made at the January 26 meeting, he said.

A FEMA spokesperson said privatization is one option on the table, but has not been formally endorsed by FEMA. A spokesperson for the Property Casualty Insurers Association of America (PCI) expressed skepticism that privatization could work. "You could do it, but you'd have to get double the premium," said Ben McKay, PCI senior vice president of federal government relations.

A one-year extension of the existing program is scheduled to lapse September 30, 2011. The one-year extension means Congress averts another lapse in the flood insurance program. There were four program lapses in the past year as Congress approved extensions of only months or weeks, then failed repeatedly to act in time to avert interruptions in the program. There were two main stumbling blocks to reform with a long-term extension: calls to add windstorm coverage and the $18 billion in debt the program has amassed, largely due to Hurricane Katrina five years ago.

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