Senate Legislation On Flood Program Passes

NU Online News Service, Sept. 30, 3:45 p.m. EDT

WASHINGTON–The Senate passed legislation today extending the controversial National Flood Insurance Program until Oct. 31 while talks continue on a more permanent reauthorization.

The interim extension was approved on a 62-38 vote. It was included in a continuing resolution funding the program, mostly at current levels, for another month while work continues on a myriad of appropriations bill.

The government fiscal year ends on Sept. 30, and extensions of existing appropriations have become all but routine as Congress delays action further and further into the year.

The new flood program language supersedes legislation passed by the House July 29 that would have extended the current NFIP until March 31, 2010, while talks continue to work out differing House and Senate concepts for a continued flood program.

The July House measure would have added a provision introduced as separate legislation by Rep. Doris Matsui, D-Calif., aimed at making it easier for states and local communities to restore or improve their flood protection systems.

The House last Friday included the one-month extension in its own continuing resolution.

Original authorization for the NFIP expired last Sept. 30. The current program has been extended several times since then because the House and Senate have found difficulty in finding common ground on a new bill.

The NFIP insures approximately $1 trillion in properties in flood-prone areas.

A key congressional controversy over the program is whether to include a provision in House-passed legislation which would add wind damage coverage to the program. That measure is opposed by all sectors of the insurance and reinsurance industries.

Among other key differences is a Senate bill proposal to pay off the approximately $20 billion deficit in the program created by huge claims sustained during Hurricanes Rita and Katrina in 2005. The House bill has no appropriation and calls for a study about how the deficit should be dealt with.

In exchange for paying off the debt, the Senate bill language includes steps to deal with properties that are the subject of repetitive flood claims. It calls for the use of updated maps to designate flood-prone areas and creation of a system to remove repetitive claimants from those areas.

The Senate bill also proposes creation of a nonpartisan commission to examine the proper approach to managing catastrophic risk. Neither provision is included in the House version.

And, in a provision opposed by the insurance industry, the bill establishes an "ombudsman" within the Federal Emergency Management Agency whose job it will be to ensure that the 93 private participating insurers who sell the coverage for the government properly adjust damage claims so the flood program does not pay for wind damage the insurers are liable for. The House bill does not include such a provision.

A study released by the Government Accountability Office last week questioned what it found to be lax oversight of the insurers who write coverage for the flood program.

The report said the government doesn't have the means to determine how much profit Write-Your-Own insurers are making, and whether that level is appropriate despite the fact the raw data to audit the program is available through the National Association of Insurance Commissioners.

At the same time, the House bill also tightens language dealing with state laws that lawmakers in Louisiana and Mississippi argue allow private insurers to slough off all their liability for losses covered by hurricanes to the government.

These provisions hold private insurers harmless for claims when damage is at least partly caused by a flood.