The National Flood Insurance Program (NFIP) will likely need to go to Congress for additional borrowing authority to pay claims from Superstorm Sandy, according to two government watchdog organizations.
“It appears likely that Sandy will exhaust the NFIP's remaining $3 billion of statutory borrowing authority, meaning it will need to request more money from Congress to pay its claims,” R.J. Lehmann, a senior fellow at the R Street Institute (a Washington think tank), says in a statement.
“In the short term, we would insist the NFIP use its existing authority to raise rates, buy reinsurance and issue catastrophe bonds, so that the private market, rather than taxpayers, assumes the risk of these sorts of catastrophes in the future,” he adds. “Over the longer term, further NFIP reform must include phasing in actuarial rates for all policies and possibly selling some of the NFIP's 5.6 million policies to private insurers.”
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