NU Online News Service, May 31, 3:15 p.m.EDT

Legislation introduced in the Senate late last week maycomplicate chances of the National Flood Insurance Program's (NFIP)long-term reauthorization before the current extension runs outSept. 30.

The Senate bill, which contains a five-year NFIP extension,would split the difference on the sensitive "wind-vs.-water" issue,a provision not contained in the House's flood-program extensionbill.

The bill is the Consumer Option for an Alternative System ToAllocate Losses Act of 2011, or COASTAL Act, S. 1091, introduced bySen. Roger Wicker, R-Miss.

It was introduced as the House firmed up plans to vote on itsextension legislation, the Flood Insurance Reform Act of 2011, H.R.1309, either next week or the week after, according to severalindustry officials.

"The fundamental idea in this bill solves one of the majorquandaries facing the nation's current coastal insurance system,"says Eli Lehrer, the Heartland Institute's vice president forWashington, D.C. operations.

"The current haphazard system for allocating claims between NFIPand wind insurers often leaves everyone involved worse off," Lehrersays. "This bill holds out the possibility of developing a fair,equitable system that serves everyone's interest. It's not perfect,but given that the system proposed is optional and will not requirea meaningful commitment of tax dollars, it certainly seems like aworthwhile experiment."

But officials of the National Association of Mutual InsuranceCompanies (NAMIC) voiced concerns. "We appreciate Sen. Wicker'swillingness to address this complicated issue and look forward toworking with him to find a solution that works for everyone," saysMatt Gannon, assistant vice president of federal affairs for NAMIC."However, we have some concerns that his plan could cause moreconfusion for insurers and consumers in the aftermath of a majorflood."

The bill would create a "standardized loss-allocation" system todistribute losses between the National Flood Insurance Program andprivate or residual-market-provided wind insurance following thetotal loss of any property that carries both flood and windinsurance.

The Wicker bill would utilize data currently collected by theNational Oceanic and Atmospheric Administration, academicinstitutions and private entities to allocate wind-vs.-waterdamages following significant storms.  Using a post-stormevent formula developed under the Wicker bill, damage would bedetermined by its source and attributed to wind or water peril,Wicker says. 

 The formula would be applied on a property-by-propertybasis so individual engineering characteristics of each home wouldbe taken into account, he notes.

"This would allow accurate insurance settlements when notangible evidence remains after a hurricane," Wicker says.