Flood Bill Reauthorization Possible Soon

WASHINGTON–In a breakthrough, the Senate leadership is clearing the decks for consideration of legislation intended to reform and reauthorize the National Flood Insurance Program (NFIP) as early as Tuesday, according to an insurance industry sources.

The reauthorization bill (S-2284), was passed last October by the Senate Banking Committee and calls for forgiving the more than $17.3 billion in debt the national flood program incurred in dealing with Hurricanes Katrina.

The Senate bill does not include a provision contained in companion House legislation that authorizes the NFIP to offer coverage for wind losses. That bill, H.R.-3121, passed the House on Sept. 27 and is not supported by the insurance industry.

In exchange for paying off the program's debt, the drafters of the Senate bill, Sen. Chris Dodd, D-Conn., and Richard Shelby, R-Ala., the chairman and ranking member of the panel, included language calling for updating the flood maps and extension of a pilot program enabling the NFIP to charge actuarial sound rates where repeated losses have occurred. That provision, as well as others, prompted senators from two coastal states to block action on the bill.

Senators from Louisiana and Mississippi, David Vitter, R-La, and Mary Landrieu, D-La., and Roger Wicker and Thad Coburn, both R-Miss, feared that the mandate to charge actuarial rates would make the program unaffordable to many Louisiana and Mississippi residents.

The way was cleared for Senate action after the Louisiana and Mississippi senators sent a letter on April 16 to Sen. Dodd and Sen. Shelby saying they would allowing action on the reauthorization if the leadership agreed to address their concerns by allowing floor amendments.

In anticipation of consideration of the bill industry trade groups are reiterating their concerns about the House bill.

In a statement, Justin Roth, senior federal affairs director at the National Association of Mutual Insurance Companies, said the association “will continue to advocate for the legislation in its current form, with no amendments–such as the inclusion of wind coverage, that would increase the exposure and liability of the program.”

He added that, “The flood program is too important to Americans living in flood zones to risk adding provisions that could potentially bankrupt the program.”

The Reinsurance Association of America announced Thursday it joined a diverse coalition of environmental, consumer, taxpayer and insurance advocates to create the Americans for Smart Natural Catastrophe Policy. The group opposes proposals that would add wind damage to the NFIP or create new federal natural catastrophe loan, insurance or reinsurance programs.

“The diversity of the coalition's membership speaks to the broad-based opposition to fiscally and environmentally irresponsible responses to natural catastrophes,” said Frank Nutter, president of the Reinsurance Association of America.

“With our combined efforts, the Americans for Smart Natural Catastrophe Policy can successfully demonstrate that certain legislative proposals being considered by the Congress are misguided and costly to American taxpayers,” he said.

(This story was updated at 10:07 a.m. on May 5)