The political and financial fallout from Superstorm Sandy willcontinue despite President Obama signing legislation on Sunday thatwill allow the National Flood Insurance Program to continue to payclaims.

For one thing, Northeast Senators are demanding prompt action onthe $51 billion remaining on the aid package that the Senate passedDec. 28 and the House declined to deal with late New Year's Day.The House is scheduled to take up the remainder of the bill Jan.15.

And in floor comments Friday, Rep. Jeb Hensarling, R-Texas,incoming chairman of the House Financial Services Committee, saidthe committee will take up legislation this year aimed at devisinga transition to a private flood-insurance market.

Hensarling, however, did not provide a timetable on when theHouse FSC will take up the issue.

In his floor comments, Hensarling specified that his legislationwill seek a "transition to a private, innovative, competitive,sustainable flood insurance market."

He said the bill would serve to end unsustainable taxpayerbailouts once and for all."

R Street Senior Fellow R.J. Lehmann responded by saying thatwhile there will be challenges in moving to a fully private marketfor flood insurance, including development of appropriateunderwriting and catastrophe modeling tools, flood risks alreadyare privately insured in many other developed markets, includingAustralia and the United Kingdom.

"For decades, the NFIP has been offering below-market rates thathave subsidized construction in risky and environmentally sensitiveregions across the country," Lehmann said. "Unwinding thosedistorted market signals in a way that causes minimal pain toexisting home and business owners will be a challenging process,but one that is well worth exploring for the sake of both taxpayersand the environment."

He adds, "The catastrophes we saw in 2012 should be a wake-upcall that we simply can no longer afford to encourage people tolive in harm's way. We welcome Chairman Hensarling's commitment tofuture flood insurance reform and would offer our own expertise formembers of Congress seeking ways to make privatization areality."

The NFIP's borrowing authority is now up to $30.425 billion,from $20.775 billion as a result of the relief bill passed lastweek.

Steve Harty, president and CEO of National Flood Services,Kalispell, Mont, which handles the back-office work for mostWrite-Your-Own insurance companies, said late Friday that his firmhas "been burning the candle at both ends to keep up with the heavyvolume of claims that have been generated by Hurricane Sandy."

He said, "We are very pleased that Congress took action todaythat will provide the additional borrowing authority that willallow the NFIP to honor its contractual obligations. Surely thetaxpayers and the policyholders across America expect and deservenothing less."

Officials of the Federal Emergency Management Agency, whichadministers the program, said payments on more than 115,000 claimsin states across the country will now be processed as a result ofcongressional and presidential action.

Dave Miller, FEMA's associate administrator for the FederalInsurance and Mitigation Administration, said that, to date, nearly140,000 claims have been made and $1.7 billion has been paid outfor flood-related damages stemming from Sandy.

In asking the Senate to expedite passage of legislation Fridaythat raised the NFIP's borrowing authority by one-third, Sen.Charles Schumer, D-N.Y., a member of the Senate Democraticleadership demanded prompt House action on the remainder of the$60.4 billion aid package passed by the Senate Dec. 28.

"We really had no choice but to pass this provision, because thefederal government is obligated to reimburse when people havefloods if they paid in their flood insurance," Schumer said. "Whilethis bill is important, it's something we were almost obligated todo, and we should not have parades down the street because thisbill has passed."

Schumer said that the members of  Congress from theNortheast, as well as governors from the states where Sandy hit,"are worried that the second major portion of this relief bill willnot get through the House in the form that it should, so we needthe House to pass not only the $9 billion that we have passed thismorning, but the $51 billion that contains the bulk of the aid thatpeople need, without which we will not be able to recover."