The borrowing authority for the National Flood Insurance Program would be increased 50 percent, to $30.4 billion, as part of a Superstorm Sandy supplemental budget request submitted to Congress by the Obama administration late Friday.
Michael Chaney, Mississippi insurance commissioner and head of the flood insurance working group for the National Association of Insurance Commissioners, says the request for increased funding is appropriate.
Chaney says current estimates by risk modelers are that the storm is a $55 billion event.
“I think [the proposed increase in borrowing authority] is an adequate amount for existing losses and potential losses,” Chaney says. “It also provides a small cushion for future events.”
Chaney says he has talked to the Mississippi congressional delegation and will write letters to the appropriate House and Senate committees supporting the request.
He says that the Federal Emergency Management Agency is working through the NAIC Washington and Kansas City offices to ensure that the sought-after request is adequate.
He said he thinks the increase in borrowing authority will be included in the package that deals with preventing the so-called “fiscal cliff.”
Cheney also says there is tremendous pressure to address the NFIP issue because “there are people in dire straits who need help today.”
Carolyn Kousky, a fellow at the Wharton Risk Center in Washington, D.C., and co-author of a study released last month on NFIP funding, agreed that the new borrowing authority is needed in order for the NFIP to be able to pay its claims from Sandy. “But it again calls into question the financial stability of this program, given its huge debt,” she says.
She adds that although some very important price reform was implemented last summer, “some think that more perhaps needs to be done, particularly regarding incorporating changing conditions into the program, such as from development, coastal erosion, or climate change—particularly given how long it takes the Federal Emergency Management Agency to update maps.”
The request for the hike in the NFIP’s borrowing cap was included in a request for $60.4 billion “in federal resources for response, recovery and mitigation related to Hurricane Sandy damage in all affected states,” according to the transmission letter.
It was signed by Jeffrey D. Zients, deputy director for management at the Office of Management and Budget.
The request represents a $9.7 billion increase in the NFIP borrowing authority, from $20.75 billion to $30.4 billion.
Whether Republicans in the House would demand offsetting cuts in return for support for the aid package is unclear. Otherwise the $60.4 billion package, if appropriated, would add to the current deficit.
Michael Steel, a spokesman for House Speaker John A. Boehner, R-Ohio, says “We have the request, and will review it.”
House Appropriations Committee Chairman Harold Rogers, R-Ky., says his committee would consider the request “very thoroughly, with an eye towards prioritizing urgently needed recovery efforts that will have the most benefits to the victims of this storm.”
New York and New Jersey’s four Democratic senators say in a statement that the request “doesn’t cover all of New York and New Jersey’s needs” but does cover “a large percentage.”
The statement adds that they believed the request will be the first of several supplementals that will be necessary “as our states’ needs become more clear, and we look forward to working with the White House on those as well.”