Recent statements from Massachusetts House Representative Barney Frank indicate a possible showdown over the National Flood Insurance Program could be looming come spring. The issue revolves around the borrowing authority limit, which has been temporarily raised several times in the last eight months to accommodate the NFIP in paying all of its claims from Hurricanes Katrina and Rita.
In a recent statement Frank said, "Congress must resist the temptation to dodge this issue again when this new borrowing authority limit is reached in May or June of this year — in fact, I will not vote for another temporary solution."
Proposed legislation would permanently increase the borrowing authority from $3.5 billion to $22 billion. If not increased, it is unclear how the NFIP would continue to pay claims made by policyholders. In addition to raising the borrowing limit, the legislation also would examine if flood insurance should be offered to properties located in a 500-year floodplain, increase the maximum coverage amounts for residential properties, require regular updates on flood zones, tighten rebuilding or demolition requirements, and provide better information to homeowners as to what is covered under the policy.
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