The U.S. Senate vote expected this week on legislation reauthorizing and reforming the National Flood Insurance Program–without adding wind coverage–will strengthen the insurance industry's hand in the coming talks with the House of Representatives on a compromise bill, insurer lobbyists say.

The Senate set the stage for a victory for the insurance industry on this contentious issue with an overwhelming 73-19 vote on May 7, rejecting the wind exposure amendment. The industry lobbied heavily against adding wind coverage to the flood program.

The amendment is included in the House version of the bill–H.R. 3121–but a Government Accountability Office report critical of the move, and a message to the Senate early last week by advisers to President George W. Bush warning they would recommend a veto if the legislation contained such a provision, apparently weighed heavily on the final vote count on the amendment.

Work on the bill continued last week as this edition went to press, but a final vote was delayed until after debate on May 12 on two nonrelated amendments dealing with energy issues.

“We've had good cooperation on both sides. What we're going to try to dois finish this bill,” said Senate Majority Leader Harry Reid, D-Nev., on May 7.

Ben McKay, senior vice president for federal government relations at the Property Casualty Insurers Association of America, said he believes the vote will help clear the way for final action on the NFIP renewal and reform bill before the program's authorization runs out Sept. 30.

“The Senate's vote should be the death knell for the wind amendment,” Mr. McKay said. “Rep. [Barney] Frank, D-Mass., chairman of the House Financial Services Committee, said last year that he would not insist on keeping the windstorm provision if it would kill the overall flood bill.”

With the Senate's rejection of that provision, Mr. McKay said, “the White House's stated intention on vetoing a bill that contains [a wind amendment], and the recent GAO report showing onerous costs to taxpayers if it is included, it is clear that the wind language would ultimately kill the flood bill.”

Now, he added, “the House can focus on the viable provisions of this legislation.”

The Senate bill would reauthorize the insurance program while phasing out below-market rates for second homes, increasing annual deductibles, anderasing more than $17 billion in debt accumulated as a result of HurricaneKatrina.

The Senate voted against the wind provision despite exhortations from senators from Florida, Louisiana and Mississippi about how important it was to make homeowners insurance coverage available and affordable to coastal residents in the wake of Hurricanes Katrina and Rita.

The amendment was sponsored by Sen. Roger Wicker, R-Miss. Fellow Mississippi Republican Thad Cochran said during the debate on the Senate floor that many private insurers in coastal regions no longer offer wind insurance, forcing homeowners to turn to state pools, where the premiums can be prohibitively expensive.

But Sens. Christopher Dodd, D-Conn., and Richard Shelby, R-Ala.–the chair and top Republican on the Senate Banking Committee, respectively–opposed the wind damage amendment. They left it out of the bill that passed their committee last October, and said during the debate on the Senate floor that adding wind coverage could expose the program to unacceptable exposure at a time when the NFIP is trying to recover from bankruptcy.

“We have no idea what the cost of this program would be,” Sen. Dodd said.

Several other amendments proposed by coastal senators were also defeated, as senators from Louisiana and Mississippi were stymied in efforts to add provisions to reduce the cost of homeowners and flood insurance for their constituents.

For example, one defeated amendment, sponsored by Sen. David Vitter, R-La., would have raised NFIP coverage limits and slowed premium increases. Also defeated was an amendment by Sen. Mary Landrieu, D-La., which would have waived a requirement in the bill that homes near dams needed flood insurance.

In exchange for paying off the program's $17.3 billion debt, the drafters of the Senate bill–Sens. Dodd and Shelby–included language calling for updating of flood maps, as well as extension of a pilot program enabling the NFIP to better deal with severe repetitive loss structures that have incurred flood damage on more than one occasion.

The House bill does not contain such a provision. Its version calls for a study of how the debt can be paid off. That is one of the issues that will have to be resolved before a final bill is passed by Congress and sent to President Bush.

A key vote was expected as this edition went to press following efforts to forge a compromise on an amendment proposed by Sen. Landrieu that would create an inspector general within the parent agency of the program to ensure that insurance companies don't inappropriately push wind liabilities to the NFIP.

“I don't know why the [original bill drafted in the Senate Banking] Committee didn't come down harder on this,” Sen. Landrieu said.

Special Reports /

Senate Expected To Okay Flood Reforms, But Wind Cover Dead In The Water

Related Stories

Recommended For You