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Chaney Warns NFIP “One Large Event” from Needing More Money

Mississippi Insurance Commissioner Mike Chaney, who is also head of the NAIC Property Casualty Insurance Task Force, is warning that the federal flood insurance program is just “one large event” away from needing to ask Congress for permission to borrow more money...
March 19, 2013

Mississippi Insurance Commissioner Mike Chaney, who is also head of the NAIC Property Casualty Insurance Task Force, is warning that the federal flood insurance program is just “one large event” away from needing to ask Congress for permission to borrow more money. He made the projections based on the estimated cost of Superstorm Sandy to the National Flood Insurance Program — roughly $7 billion. Chaney’s comments were among several regarding the flood insurance program at a Federal Advisory Committee on Insurance meeting on March 13.

Chaney made his comments based on information provided to him by the Federal Emergency Management Agency (FEMA) stating that once Sandy settlements are paid — approximately 3 months from now — the NFIP will have a $28 billion deficit. Given the projections on the cost of Sandy claims, the NFIP will have $2.425 billion in borrowing authority left once all payments are made. “This is probably enough for a couple of small events, of course, but they are only one large event away from needing additional money,” Chaney said.

In comments at a the March 13 FACI meeting, Edward Connor, a FEMA official, said the agency was working on privatizing the agency. Connor serves as deputy associate administrator of the Federal Insurance and Mitigation Administration, within the Department of Homeland Security.

NFIP “One Large Event” Away from Needing More (National Underwriter 3/15/13)

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