White House Opposes Wind Cover In Flood Insurance Program

Asked for comment, officials of two property-casualty insurance industry trade groups said they supported the administration's position.

Leigh Ann Pusey, president of the American Insurance Association, said Ms. Napolitano's approach represents "a reasonable and sound approach moving forward."

"Most importantly, we support the Administration's view that adding wind coverage to the NFIP is misguided and would further increase the NFIP's growing debt that already exceeds $19 billion."

She added, "We also echo the view that increasing the burden on the NFIP by adding wind coverage is unnecessary given that wind coverage is available in every state through either the private market, or state residual markets backed by private insurers."

David Sampson, president and CEO of the Property Casualty Insurers Association of America, said his group believes "the administration has taken the right position and demonstrated a thorough understanding of this vital issue."

The policy articulates "a proper balance between concern for taxpayer dollars and maintaining the private marketplace, while ensuring consumers have choice and availability," Mr. Sampson added.

In the letter, Ms. Napolitano also opposed other provisions in the House flood program bill passed in 2007 that would have mandated the participation of the Federal Emergency Management Agency, which oversees NFIP, in state-sponsored mediation programs, and establishment of an "unnecessary" flood insurance advocate.

But, the letter said, the Obama administration does support a provision in the Senate bill passed in 2008 that would pay off the approximately $17 billion debt incurred by the program to pay for Hurricanes Katrina, Rita and Wilmer in 2005.

The administration's letter is consistent with comments made by its nominee to head FEMA, Craig Fugate, former director of the Florida Division of Emergency Management.

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

Mr. Fugate's confirmation as FEMA administrator is expected at any time. Confirmation was previously delayed when Sen. David Vitter, R-La., placed a hold on the nomination out of anger that FEMA had not acted to provide funds to rehabilitate several areas of his state that had been the subject of serial flooding.

Legislation (H.R. 1264) was introduced in the House March 4 by Rep. Gene Taylor, D-Miss., that would again add wind coverage to the NFIP. The flood insurance program was due to expire Sept. 30, 2008, but was extended to give time for Congress to pass a compromise between competing House and Senate bills.

In her letter, Ms. Napolitano voiced support for several provisions contained in either the House or Senate bill.

These include a phase-in of actuarial rates for non-residential properties; non-primary residences and repetitive loss properties; raising the cap on chargeable annual increases in premiums from 10 percent to 15 percent; and authorizing an ongoing program to review, update, and maintain flood insurance program maps.

The letter also voices support for reestablishing the Technical Mapping Advisory Council, "the duties of which would include developing recommendations for improvements to the flood mapping program."

Regarding adding wind coverage, Ms. Napolitano said the administration opposes it because "coverage is available in the private sector and through wind pools.

"Property is served by the private market, which provides catastrophic windstorm coverage without the need for federal aid," she said.

"The administration opposes 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," she added.

"Many carriers in Florida have told the state's insurance regulator that they would write the wind policies of insurers withdrawing from the state."

Kathy Mitchell, federal affairs director for the National Association of Mutual Insurance Companies, said, "NAMIC is pleased that after giving serious consideration to the flood issues facing our nation, the Obama Administration has chosen to follow a fiscally responsible policy approach to shoring up this vital program. We encourage Congress to follow the administration's lead."