The House Financial Services Committee yesterday approved by voice vote and sent to the floor a measure to increase the borrowing authority of the federal flood insurance program before it runs out of cash.

Agent groups while applauding the panel's action voiced concern that final action on the bill would be delayed. The legislation passed by the committee would increase the borrowing authority of the Federal Emergency Management Agency by $22 billion from the current $3.5 billion.

The Bush administration has proposed an increase to only $8.5 billion because of the impact on the budget deficit.

But whether the Senate and House will act on the legislation before Congress takes a two-week Thanksgiving Day break was unclear, causing worry among agent trade organization membership.

"Agents in Florida and Louisiana are calling because the FEMA borrowing authority needs to be extended before Congress leaves for the Thanksgiving Day recess," said Charles E. Symington Jr., senior vice president of government relations and federal affairs for the Independent Insurance Agents and Brokers of America.

"For the House, this could be as late as Saturday. This is an issue that needs to be addressed this week, and we will do as much as we can to make that happen."

Insurance agents said they are concerned that the money will run out for them to continue processing claims and making payments in flood-ravaged areas of the Gulf Coast.

Patricia A. Borowski, National Association of Professional Insurance Agents senior vice president, said, "PIA thanks the members of the House for recognizing the urgency of this situation by taking this action today on the borrowing authority and making clear in their comments that more will be needed to meet ongoing NFIP claims obligations to federal policyholders.

"Now, the Senate needs to follow suit before adjourning for the Thanksgiving holiday," Ms. Borowski added. The Senate has yet to pass companion legislation increasing the NFIP's borrowing authority.

"Any delay in the Senate will effectively place a hold on the ability of the NFIP to ensure that valid claims that have already been filed are paid," Ms. Borowski said.

The vote in the House Financial Services Committee occurred against the background of a notice sent by officials of the flood insurance program to insurance companies last Friday saying that requests for credit increases have been temporarily suspended.

Agency officials are advising insurers to "discontinue issuing claims payments to the extent that you would need additional Letter of Credit amounts," according to officials at the IIABA and the PIA.

The bill passed by the Financial Services panel does mandate some reforms in the program. For example, it calls on the Government Accountability Office to determine which property owners should be required to purchase coverage through the National Flood Insurance Program.

Special Reports /

House Panel Acts To Bolster Flood Program

Related Stories

Recommended For You