NU Online News Service, Aug. 18, 2:43 p.m. EDT
A five-year National Flood Insurance Program extension bill passed by the House in July is unlikely to pass the Senate before the program's next scheduled expiration on Sept. 30, representatives for two Washington-based agent groups said.
Rita Hollada, National Association of Professional Insurance Agents' (PIA) representative to the Flood Insurance Producers National Committee (FIPNC), and a former FIPNC chair, said the expectation she is hearing is that if the program is reauthorized without lapsing again, it will probably be another short-term extension to Dec. 31 to bide time until the next Congress can act on reforms to the program.
John Prible, vice president for federal government affairs for the Independent Insurance Agents and Brokers of America (IIABA), said IIABA is grateful to the House for passing the five-year extension, H.R. 5114, but he said that "it's somewhat unlikely the Senate will act."
The reforms, which have been debated since Hurricane Katrina put stress on the program, are contentious in the Senate, he said, and he added that he does not see senators coming to an agreement over the next month.
He said while it may be unrealistic to ask for the five-year extension, another three- to six-month reauthorization is not a good strategy. Mr. Prible said legislators have been using short-term extensions and looming deadlines as "a stick" to force the issue on a long-term bill with reforms.
"I'm beginning to question the effectiveness of that strategy since it seems everyone is very willing to call [each other's] bluff," he said.
Ms. Hollada said the flood program had been paying for itself prior to Katrina, but the 2005 hurricane was "such a huge shock loss" that the program suffered far more losses than it could cover, and it was forced to borrow money from the Treasury.
The program is now over $18 billion in debt.
The NFIP, she said, feels that Katrina was an aberration, and that the program is well-suited to handle losses in a "normal year." She added that the NFIP would like Congress to forgive the debt since it sees Katrina as an anomaly, but the House "is not amenable to forgiving the debt."
People in Congress, Ms. Hollada said, feel the program is broken and want to enact reforms.
Meanwhile, she said, others in Congress are applying pressure to increase available coverages provided by the NFIP.
Rep. Gene Taylor, D-Miss., for example, is seeking to add wind coverage to the program to resolve future "wind vs. water" disputes.
Ms. Hollada said other legislators feel their constituents did not get full recovery under their flood policies after disasters and are seeking to add coverage for economic losses.
The program, meanwhile, is "caught between a rock and hard place," Ms. Hollada said, because, by statute, rates cannot be increased by more than 10 percent per year. The program, she noted, is under pressure to add coverages and recover premium to pay its debt, but it cannot raise premiums enough to do so.
As Congress continues its strategy of passing short-term extensions, the program has lapsed several times, most recently in June. Later this week, NU Online News Service will examine how the lapses, and the confusion they have caused, have impacted agents, their clients and insurers that take part in the NFIP's Write Your Own program.
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