NFIP Extended Until 5/31; Vote Looms On New Bill

Officials of the American Insurance Association said the goal of congressional leadership is to finish work by May 31 on a so-called tax extender's bill, H.R. 4213, "thus precluding the need for another short-term extension of the NFIP."

Blain Rethmeier, an AIA spokesman, added that, "Families living in flood prone areas can now obtain the coverage they need and move on with their lives. We're glad the program has been extended and look forward to working with Congressional leaders to enact more meaningful reform rather than continuing to pass extension after extension."

That bill would extend the NFIP through Dec. 31, 2010.

According to officials of the Independent Insurance Agents and Brokers of America, "in theory, the NFIP will now return to normal operations and since the extension is also retroactive, any new policy applications or renewals that were signed and submitted during the hiatus will be effective from the date of application (or in the case of waiting periods, the waiting period will start from the date of application)."

At the same time, the House Financial Services Committee plans to unveil legislation today providing long-term reauthorization and reforming of the program.

A hearing will take place on that bill and on legislation proposed last year by Rep. Gene Taylor, D-Miss., that would add wind to the NFIP in the Housing Subcommittee of the House Financial Services Tuesday. The full committee plans to vote on flood insurance measures Thursday, according to officials of the Financial Services Roundtable.

Besides the committee bill, sponsored by Rep. Maxine Waters, D-Calif., chairwoman of the House Subcommittee, H.R. 1264, the Multiple Peril Insurance Act of 2009, the full committee also plans to take up H.R. 2555, the Homeowner's Defense Act, sponsored by Rep. Ron Klein, D-Fla.

Industry officials said the bills will be voted on separately. The industry unanimously opposes Rep. Taylor's bill because it would add wind to the NFIP. The industry is split, however, on the Homeowner's Defense Act, which would provide reinsurance for state catastrophe programs.

The provision extending the NFIP until May 31 was contained in H.R. 4851, "The Continuing Extension Act of 2010."

The House passed the bill, 289-112, after the Senate passed the bill in late afternoon, 59-38.

The bill was originally passed by the House several weeks ago, but had to be returned to the House after an amendment sponsored by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, extended the expiration dates for the various programs from the end of April.

That would have forced Congress to pass another extension before the end of the month or see the programs lapse again.

The bill also included provisions extending unemployment insurance benefits until June 2, and extends the COBRA program–which provides a 65 percent subsidy to help pay for health insurance for unemployed workers–through May 31.

The bill extends current Medicare payment rates for physicians (preventing a 21 percent payment reduction) through May 31, 2010.

In a statement, Robert Rusbuldt, IIABA president and CEO, said it is "alarming" that the NFIP was allowed to expire.

He said doing so "caused so much confusion" and potentially left "desperate homeowners and small businesses unprotected for more than two weeks."

He said the IIABA "is greatly concerned" that these short expiration periods, coupled with the uncertainty of temporary extensions, will negatively impact the market."

Charles Symington, IIABA senior vice president of government affairs, added, "This series of temporary extensions, last minute actions and service lapses during such a delicate period in our economy is of great concern to our agents, homeowners and small businesses."

He said agents are "frustrated by these repeated one-month extensions and the periods of expiration that sometimes result from them." He argued that the NFIP is meant to provide a level of stability and protection "for homeowners and businesses against dangerously unpredictable and costly flooding events, not to be an unpredictable 'here one minute-gone the next' program subject to monthly congressional action. The IIABA strongly urges Congress to pass a long term extension of this critical program," Mr. Symington said.

The National Association of Mutual Insurance Companies (NAMIC) today called on members of Congress to set aside partisan differences and "enact common sense reforms for the National Flood Insurance Program before it expires again on May 28."

Jimi Grande, senior vice president of federal and political affairs for NAMIC said, "The NFIP has already been allowed to lapse twice this year, first for a few days and then for weeks, because of unrelated political squabbles. Clearly this is an untenable situation."

He added, "It's an embarrassment that five years after Hurricane Katrina we still have not fixed the NFIP. With hurricane season starting in a matter of weeks, Congress needs to use this time to pass a long term NFIP extension with sensible reforms that both sides of the aisle can agree on."

Mr. Grande also noted that, "Adding windstorm coverage to the NFIP would more than undo the benefits of other reforms and ensure that the program will never be financially stable."