Washington–Insurance companies and agents can resume processingand paying flood damage claims that had been held up pending arenewal of financing for the federal program, the acting head ofthe National Flood Insurance Program said late last night.

David I. Maurstad, acting National Flood Insurance Administratorand acting director of the Federal Emergency Management Agency'sMitigation Division, issued the statement after President Bushsigned legislation passed by Congress Friday that raised the NFIP'sborrowing authority to $18.5 billion from $3.5 billion.

"We're extremely pleased that Congress has passed and PresidentBush has signed legislation authorizing the National FloodInsurance Program to borrow up to $18.5 billion, which will allowinsurance companies to continue paying claims from the 2005hurricane season," Mr. Maurstad said.

"FEMA will be working to immediately notify insurers thatadditional borrowing authority has been granted and that theyshould resume processing and paying claims as soon as possible," headded.

Claims-processing and paying for insurers and agents whoparticipate in the NFIP Write-Your-Own program had been in limbofor approximately 10 days.

That is when FEMA notified those participating in the W-Y-O thatthey could continue evaluating claims but could not make paymentsbeyond their existing lines of credit.

The legislation was passed after the House agreed late Friday toSenate amendments imposing some reforms on the program.

Industry trade groups have sent out memos to their members overthe last several days saying Congress is expected to work onlegislation when it resumes work Dec. 5 that would increase theborrowing authority by an additional $4.5 billion and imposeadditional reforms.

The total $22.5 billion in borrowing authority is projected byCongress to be all that is needed to cover all current and expectedclaims from the recent storms, according to the Financial ServicesRoundtable.

The National Association of Mutual Insurance Companies also saidthat when Congress returns in January, it will likely take uplegislation to further extend NFIP's borrowing authority, "so thatthe remaining $7-to-$15 billion in expected claims can be paidexpeditiously."

David Winston, senior vice president-Federal Affairs for NAMIC,said that the enactment of the interim increase in funding of theNFIP was critically important. However, he noted that many membersof Congress have indicated that "any additional funding will becontingent on several possible reforms of the NFIP."

Among the possible reforms are mandatory coverage for everyonewho lives in the natural 100-year flood plain, extending the floodzone to 1-in-500-year flood zones, and increasing the level ofcoverage from the current maximum of $250,000.

Mr. Maurstad alluded to the possibility of reforms when he notedin his statement, "In the coming weeks, FEMA will continue to workwith lawmakers on securing additional borrowing authority, ifneeded, and will work with Congress as discussions continuestrengthen the flood insurance program."