The National Flood Insurance Program would get yet anothershort-term extension–this time until Sept. 30–under expeditedprocedures legislation approved last week by the U.S. House ofRepresentatives on a unanimous vote.

However, officials of the National Association of MutualInsurance Companies (www.namic.org) and the AmericanInsurance Association (www.aiadc.org) cautioned that it isunclear when the Senate will act on the measure.

The NFIP lapsed for the third time this year on June 1.

In urging that the temporary extension be passed, Rep. IleanaRos-Lehtinen, R-Fla., called the extension "critically important.It is much needed and very overdue."

Another Florida representative put into the record a letter fromthe National Association of Realtors explaining how importantreauthorizing of the legislation is to the struggling housingmarket.

But Rep. Candice Miller, R-Mich., used the occasion to complainthat people in the Great Lakes Basin and other areas with littleflooding are "being treated unfairly" because new flood mapsmandated by a 2004 reauthorization of the program are raising theirflood insurance rates.

"Our residents are being abused by the Federal EmergencyManagement Agency," she said. "We very rarely make claims and,effectively, we are being used to subsidize other states which havea number of claims."

She added that "if that is the case, I call for a nationalcatastrophe program where everyone pays for flood insurance."

The bill was introduced by Rep. Maxine Waters, D-Calif., chairof the Housing and Community Opportunity Subcommittee of the HouseFinancial Services Committee.

The temporary reauthorization is needed because H.R. 4213(http://bit.ly/c3E7E1)–a jobsbill that also contains an NFIP extension until Dec. 30–is stuck onthe Senate floor due to budget considerations.

Although extending the flood insurance program is notcontroversial and, in fact, has widespread support, it has beenlumped into H.R. 4213, the American Jobs and Closing Tax LoopholesAct of 2010, which includes extensions of jobless benefits,Medicare payments to doctors and business tax breaks.

The inability to find revenues to pay for the tax cuts and otherprovisions in that bill has held up consideration and resulted inmany versions of the bill being rejected on the Senate floor.

The National Association of Professional Insurance Agents(www.pianet.com) sent a letterto the Senate on June 18 urging prompt action on the extension andnoting that the NFIP "has slipped into a hiatus."

"This is a serious situation, and the lack of action by Congressis irresponsible," said PIA National President-elect Brian Marino,co-chair of PIA National's working group on natural catastrophes."Since the NFIP lapsed, 20 people lost their lives in flash floodsin Arkansas, and in May, 29 people were killed in extreme flashflooding in Tennessee, Mississippi and Kentucky. Property damagewas extensive everywhere. Allowing the flood insurance program tolapse is just not an acceptable option."

Mr. Marino added that while no new policies can be issued duringa lapse in NFIP authorization, consumers with current floodinsurance policies remain covered. Claims payments are notaffected.

CROP COVER UPDATE

Meanwhile, crop insurers warned that the industry's "back isagainst the wall" as they reiterated objections to a planned 30percent cut to the federal crop program. (See http://bit.ly/bfsg2t for moreNU coverage.)

The new cut, constituting $6 billion over 10 years, is inaddition to the 12 percent cut imposed on the program through the2008 farm bill that is just going into effect now.

Agents will be particularly hard hit, warned Bob Parkerson,president of the National Crop Insurance Services (www.ag-risk.org), although he said atleast two of the 16 insurers in the program have warned that theymay be unable to live with the cuts.

"Agents have taken a tremendous cut. They have been singledout," he said.

According to Mr. Parkerson, agent commissions were cut moresubstantially in Corn Belt areas–the Midwest–than in other areas."They said they are rebalancing the program by making it lessprofitable in the Corn Belt and more profitable in other areas," headded.

Mr. Parkerson said 18-to-20 percent of premium is the averagecommission for agents, but some go higher. The cuts will dropcommissions to 14-to-15 percent nationally, he noted, calling that"a very sharp drop."

Charles Symington, senior vice president of government affairsfor the Independent Insurance Agents and Brokers of America(www.iiaba.net), called thedecision "unprecedented."

"The cap on an agent's earning potential does not impact thecrop insurance budget or save the taxpayer any money, andneedlessly weakens an already struggling agricultural economy," hesaid.

The new cuts will go into effect for the 2011 fiscal year,according to the U.S. Department of Agriculture (www.usda.gov).

In a statement, USDA officials said two-thirds of the savingsfrom the cuts will go toward paying down the federal deficit, andthe remaining third will support high-priority risk management andconservation programs.

Mr. Parkerson said the NCIS, which represents the 16 cropinsurers, has been in the federal program for 30 years. "Our backis against the wall," he said. "This is a very substantialcut."

As Congress continues to debate another farm bill, Mr. Parkersonsaid, "You can't take any more out of this program without totallyaltering what farmers and ranchers have come to expect from thisprogram."