Miss., La. Senators Hold Up Flood Program Bill

WASHINGTON--Senators from Mississippi and Louisiana are demanding major changes in the Senate version of legislation extending and reforming the National Flood Insurance Program, including adding a wind coverage option, before they allow the bill to reach the Senate floor for action.

The issue is critical, because there are major differences between the House bill, which the two delegations support, and the Senate bill, which passed the Senate Banking Committee last year.

Authorization for the program expires Sept. 30 unless Congress acts.

The House flood bill, H.R. 3121, passed Sept. 27 on a 263-146 vote. The Senate flood bill, S. 2284, was approved Oct. 17 by the Banking Committee on a 21-0 vote but has not come to the floor yet due to the hold.

The senators, David Vitter, R, and Mary Landrieu, D, of Louisiana, and Roger Wicker and Thad Coburn, both R-Miss., outlined their concerns with the current bill in a letter sent last week to Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee.

The letter was obtained by National Underwriter from Senate sources.

Asked to comment on the issue, Justin Roth, senior director for federal affairs at the National Association of Mutual Insurance Companies, voiced concern that reopening the Senate bill "could put this bipartisan legislation in jeopardy."

Mr. Roth said that one of the main goals of reforming the NFIP is to make the program stronger and more efficient. "Some of the requests made in the letter run counter to that goal by expanding the NFIP's coverages and liabilities."

He said NAMIC plans to continue working with Sen. Dodd "to ensure that the much needed reforms in the Senate bill get enacted, while keeping out new provisions that threaten the long-term stability of the program."

In their letter last week, the senators said that if the managers of the bill now awaiting Senate floor action aren't willing to address their concerns in a manager's amendment to be taken up on the floor, they effectively want every senator to go on record on the Senate floor as opposing them.

Specifically, they said, while they support wiping out the estimated $17 billion in NFIP debt--most of it stemming from paying claims from Hurricane Katrina and Rita in 2005--they also want homeowners wind damage coverage added to the bill.

The House bill calls for a study of how to deal with the deficit.

Regarding wind coverage, the insurance industry in general opposes that concept--now included in the House version of the legislation. The Bush administration objects to it as well and sent a veto letter dealing with the issue to the House when the bill was passed last June.

At the same time, the two delegations want caps on NFIP coverage increased, as the House bill does, and add that a rate increase phase-in imposed in the Senate bill should be adjusted to the more reasonable phase-in process mandated in the House bill.

"Both bills increase the cap on allowable rate increases, and both bills have additional measures to address rates for nonprimary homes," the letter said. "However, the Senate bill goes further in allowing dramatic rate increases in a short period for many different types of properties, such as repetitive loss properties, nonresidential properties, and homes that sustain damage of 50 percent from a disaster.

"We believe these properties should have a more reasonable phase-in period," the letter added.

Paul Kangas, director, federal government affairs, for the Property Casualty Insurers Association of America (PCI), added that "PCI continues to strongly disagree with the inclusion of wind coverage in the flood program, given that this coverage is already available for every home in the country with a roof and four walls."

He said adding wind to the NFIP would do serious harm to the economy "by destroying jobs and placing taxpayers on the hook for enormous potential liabilities."

He added that with the letter, "Senator Vitter and his colleagues are making a good-faith effort to get S. 2284 to the floor. We encourage Senate leaders to quickly address NFIP reauthorization, given that every day brings us closer to the mortgage market turmoil that the program's expiration would cause."

This article updated 10:25 a.m.