House lawmakers are expected to focus on whether or not wind coverage should be added to the National Flood Insurance Program later this week.

The bill -- HR 3121, the Flood Insurance Reform and Modernization Act -- faces opposition from at least parts of the insurance industry, who are expected to lobby intensely against it when it comes to the House floor.

One way the program reforms the NFIP, for example, is phasing out subsidized rates on vacation homes and second homes, a provision extending the program to cover all home damage perils in addition to flooding concerns in the insurance industry.

The NFIP currently owes the federal government $17.5 billion for losses, most of which were suffered as the result of Hurricanes Katrina and Rita.

While the insurance industry is expected to argue that including wind coverage will significantly increase the potential cost to the government, the Congressional Budget Office disagrees.

In its estimate of potential cost to the government of adding wind coverage, CBO says it expects the new coverage "would increase premium receipts and additional claims payments by about the same amount -- resulting in no significant net budgetary impact."

But a study by Towers Perrin Tillinghast commissioned by the American Insurance Association and released in July paints a different picture.

The study by the consulting firm said that in some scenarios, "deficits from catastrophic wind events to the NFIP in a single year could be $100 billion to $200 billion, or potentially even higher."

Rep. Gene Taylor, D-Miss., principal supporter of adding all-perils, rejected the study. His policy director Brian Martin reacted some weeks ago by saying, "Wow. You really cooked the books on that one. Are there no professional standards in the actuarial industry?"

The AIA and Towers Perrin consultants rejected the criticism by Rep. Taylor's office, saying they stood behind the study.

In a note to investors, Washington Analysis, which advises buy-side investors on Wall Street, said, "While the House will likely pass it, we expect it will have a difficult time in the Senate, where it is not likely to have the support of Senator Chris Dodd, D-Conn., chairman of the Banking Committee."

This article originally appeared in The National Underwriter P&C. For the complete article, please click here.

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