Insurers Urge Flood Program Extension

Congress wrestled with the issue of NFIP extension last year but was unable to reconcile different reform proposals in the House and the Senate.

A proposal developed by the House Financial Service Committee called for extension of the program but also included mitigation provisions. These provisions would have required the owners of repetitive loss properties to take steps, such as repairs, that would reduce or eliminate future losses.

The Senate, however, supported a straight extension of NFIP without the mitigation provisions. Congress ended up approving a six-month extension to give it more time to reach an agreement.

The industry coalition noted, however, that the June 30 deadline for reauthorizing NFIP is quickly approaching.

Moreover, the coalition said, the hurricane season has just begun and expiration of NFIP could have a drastic impact on consumers and businesses should severe storms hit the U.S.

"Any time gap created by a delay in the reauthorization would cause significant administrative problems and disruptions for policyholders," the coalition said.

The group said some insurance companies have already processed flood insurance policies backed by NFIP that have effective dates after June 30, 2004.

The industry noted that two bills are pending in Congress, S. 2238 in the Senate and H.R. 253 in the House, that would extend NFIP for five years.

Congress should pass this legislation and extend the program for five years, the industry said.

The letter was signed by the Property Casualty Insurers Association of America, the National Association of Professional Insurance Agents, the National Association of Mutual Insurance Agents, the Independent Insurance Agents and Brokers of America, the Flood Insurance Servicing Companies Association of America, the Financial Services Roundtable, Farmers Insurance Group, and the American Insurance Association.