Flood Program Extension Expected This Week

WASHINGTON–Congress is likely to extend the current National Flood Insurance Program without changes until next April 30 before it leaves at week's end, according to insurance industry lobbyists and a Gulf Coast congressman.

Action is likely because Congress wants to finish its work for the year and leave by the end of this week, and the authorization for the program expires Sept. 30, it was explained.

That would mean that Congress would have to restart next year its more than year-long effort to extend and reform the NFIP.

Work on the NFIP has become a lesser priority as Congress works to pass legislation that would provide up to $700 billion that the Treasury Department would use to create a Trouble Asset Relief Program, which would buy up troubled mortgage-backed securities and other assets from financial institutions.

According to several industry lobbyists, language extending the flood program unchanged is in a new bill introduced last week by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. The measure is also included in a draft continuing resolution legislation that would fund the government until next year. Congress may act on the bill separately or as part of the funding mechanism before it leaves sometime later this week, the lobbyists said. They declined to be quoted because talks between the House and Senate on the issue are sensitive, they said.

Rep. Gene Taylor, D-Miss., an advocate for adding wind insurance coverage to the flood program, acknowledged the likelihood of further delay in passage of a permanent extension of the current program with revisions.

In comments reported by the Jackson, Miss., Clarion-Ledger yesterday, he said, “It looks like there will be an extension.”

Rep. Taylor seeks to include wind coverage in the program. Such a provision is included in the House version of legislation reauthorizing and reforming the program, H.R. 3121.

It is not included in the Senate version of the bill, which carries the same number.

The insurance industry opposes such a provision. In comments last week, both the National Association of Mutual Insurance Companies and Property Casualty Insurers Association of America voiced opposition.

And Americans for Smart Natural Catastrophe Policy, a coalition of environmental, consumer, taxpayer and insurance organizations financed by the reinsurance industry, is also opposed.

“It's incredibly expensive and encourages development where it shouldn't happen,” said Eli Lehrer, senior fellow of the Competitive Enterprise Institute, which is part of the coalition.

Mr. Lehrer said in comments to the Clarion-Ledger that the latest study estimates the wind program, in a year with a catastrophic hurricane, would cost $140 billion.

“It's something we can't afford right now,” he said. “The private market basically works in the rest of the country.”