A group of legislators were ready to introduce legislation last week that would provide "all-perils" coverage for homeowners and small businesses under the National Flood Insurance Program.

The legislation would raise the limits of coverage currently paid under the NFIP, and the draft measure mandates that "actuarially sound" rates be charged.

"The Multiple Peril Insurance Act would allow homeowners to buy insurance and know that all of their damage from wind and water will be covered," Rep. Gene Taylor, D-Miss., said in a statement he sent members of Congress seeking co-sponsors. "They would not have to hire lawyers, engineers and adjusters to determine what damage was caused by wind and what was caused by flooding."

One co-sponsor will be Rep. Bobby Jindal, R-La., who is widely expected to run again for governor of Louisiana.

While the bill is expected to have broad support in the House, its chances in the Senate are less clear. The Senate held up legislation last year reforming the NFIP and providing more lending authority for claims because some key members--including Sen. Richard Shelby, R-Ala., then chair of the Senate Banking Committee--demanded stringent limits on property types covered.

This created problems for such senators as Libby Dole, R-N.C., and Mel Martinez, R-Fla., who thought the limits would hurt the housing market in coastal areas.

Under Sen. Shelby's plan, Congress would have wiped out the NFIP's current $23 billion debt to the government, but insist it remain solvent going forward.

The companion House bill was far more liberal, but neither side was ready for a showdown--especially since the Federal Emergency Management Agency, which oversees the NFIP, privately told members of Congress that because of the dearth of hurricanes in 2006, adequate funds were on hand to pay existing claims.

The new Taylor bill requires premiums for the optional coverage to be based on risk, "so that the program would be required to collect enough in premiums to pay claims," he said. "Otherwise, it would operate much like the flood insurance program."

Under the legislation, multiperil policies would be available where local governments agree to adopt and enforce building codes and standards designed to minimize wind damage, in addition to the existing flood program requirements for flood plain management.

The bill would set limits for coverage, but "once the program is enacted, a private market should quickly develop for policies above the limits," said Rep. Taylor.

He included headlines in his letter from newspapers from Massachusetts to Texas, noting that "insurance companies are withdrawing from coastal areas, doubling or tripling premiums, and forcing states to take on more disaster risk."

Justin Roth, a director and federal lobbyist for the National Association of Mutual Insurance Companies, questioned the legislation.

"Insurers have written wind policies under standard homeowners contracts for many years, and we maintain enough capacity to do so going forward," he said. "To shift this additional liability to the federal government at a time in which the NFIP is already running a $20 billion deficit would not be rational to homeowners or taxpayers."

Dennis Kelly, a representative for the American Insurance Association, said AIA would oppose Rep. Taylor's bill. "We support reforms to the NFIP--expanding it to cover more homes and businesses," he said. "But we oppose expanding a government program to cover perils that the private market is already covering."

The Multiple Peril Insurance Act proposed by Rep. Gene Taylor, D-Miss., would set:

o Residential policy limits at $500,000 for the structure and $150,000 for contents and loss of use.

o Nonresidential property limits of $1 million for structure and $750,000 for contents and business interruption.

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Congress To Consider Bill Establishing All-Perils Policy For Flood, Wind

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