Filed Under:Markets, Regulation/Legislation

NFIP Borrowing Authority Increase Competes with Fiscal-Cliff Debate for Senate Action

Members of Congress are being told that the National Flood Insurance Program has enough funds to pay claims resulting from Sandy until middle or late January, but only until then, according to an industry official close to the situation.

The comments about the NFIP were made as the Senate starts work tonight on a proposed aid package for victims of Superstorm Sandy that includes a 50 percent increase in the NFIP’s borrowing authority.

The Senate is taking up the measure as behind-the-scenes talks continue on how to avoid the “fiscal cliff,” the package of tax hikes and budget cuts that go into effect Jan. 1 unless contrary congressional action is taken to forestall them.

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, says, “The increase in borrowing authority for the National Flood Insurance Program continues to be caught up in the broader debate over how to address the looming fiscal cliff and respond to Superstorm Sandy.”

He adds, “The NFIP needs to meet its obligations to those who suffered flood losses during Sandy, and we remain confident Congress will vote to increase its borrowing authority prior to the NFIP reaching its limit."

Charles Symington, senior vice president of government affairs and federal relations for the Independent Insurance Agents and Brokers of America, says, “We hope Congress will quickly act to increase the borrowing authority for the NFIP in order to ensure that consumers, all of which have paid their premiums responsibly in order to have active NFIP policies, receive the claims checks they are due."”

However, there is deep concern within industry and members of Congress from affected states that that regardless of how much aid to Sandy-afflicted states are provided, the bill will be dead-on-arrival in the House.

A Washington representative of National Flood Services, the Kalispell, Mont. firm that handles the back office for Write-Your-Own insurance companies, says it appears that WYO companies are cleared to pay claims to Sandy victims at this time.

Officials of the Federal Emergency Management Agency did not respond to requests for comment.

The bill as cleared for Senate floor action last Friday provides the entire $60.4 billion requested by the Obama administration and strongly supported by affected states.

It includes an increase in the NFIP borrowing authority from $20.775 billion to $30.4 billion.

The Senate voted 91-1 late Friday afternoon to clear the entire package—supported strongly by all states impacted by Sandy, especially New York and Jersey—for floor action.

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