Flood Program Nominee Opposes Adding Wind Coverage

His nomination was cleared for floor action yesterday on a voice vote, a staff official of the Homeland Security Committee said.

Mr. Fugate's comments were made in a written response to a question from Sen. Tom Coburn, R-Okla., following his April 22 confirmation hearing before the Senate Committee on Homeland Security.

Sen. Coburn specifically asked Mr. Fugate if he would support language in legislation reintroduced in the House earlier this year that would allow the NFIP to provide windstorm as well as flood insurance.

The issue is important because such a provision was included in the House version of legislation to reauthorize and reform the NFIP that failed to pass in the last Congress.

Currently, the existing program is operating on an extension that runs out at the end of the current federal fiscal year on Sept. 30.

The program was first extended last December until March 4 because the House and Senate were unable to resolve differences between conflicting bills that would reauthorize and reform the program.

It was further extended until Sept. 30 in the legislation that provided funding for the current fiscal year that was passed in early March.

In his response to Sen. Coburn's question, Mr. Fugate said he opposed adding wind coverage to the NFIP for "several reasons."

Specifically, he said, "Coverage is available in the private sector and through state wind pools."

He added that property owners are served by the private market, which provides catastrophic windstorm coverage without the need for federal aid.

"I oppose extending the federal government's role and increasing its liability for an insurance program that is readily available in the private sector and through state insurance plans," he said. Many carriers in Florida, he noted, have told the state's insurance regulator they would be ready to write wind policies for clients of insurers who choose to withdraw from the state.

His comments were lauded by officials of Americans for Smart Natural Catastrophe Policy, a group created by opponents of adding wind coverage to the NFIP.

"We agree with FEMA Director-Designate Craig Fugate that adding wind coverage to the NFIP is a bad idea," said Rebecca Wodder, president of American Rivers, a member of the consortium.

"Congress should instead focus its attention and resources on making communities more resilient to storms by investing in the protection and restoration of wetlands, floodplains and barrier islands," she said.

"These cost-effective efforts will help protect communities while also discouraging needlessly risky development in the future," Ms. Wodder added.

In the written answer submitted to Sen. Coburn, Mr. Fugate also cited a number of reasons for leaving wind protection out of the flood program that included:

o Voluntary federal wind coverage would create significant problems involving coordination of benefits and adversely affect competition and selection among the various public and private wind programs.

o Wind coverage would greatly increase the NFIP's exposure to catastrophic risks at a time when the program has a growing debt and accrued interest of over $19 billion.

o The legislation requires federal wind insurance to be actuarially sound, as it should, so the insurance offered through a federal program will not be less expensive than what is available in the private insurance market.

o Unless communities adopt the international building codes without amendments, FEMA would be forced to review thousands of community building codes every three years and continuously monitor them to ensure compliance.