The beleaguered National Flood Insurance Program lingers on in limbo. In a bipartisan vote, the Senate voted to extend S.1958 until May 31, 2012. Senator David Vitter (R-La.) sponsored the legislation. In order to be extended to the May 31st date, however, S. 1958 now must pass the House of Representatives, which according to reports would like to extend the program only until March 31st.
The Independent Insurance Agents & Brokers of America (IIABA) praised the Senate’s actions. “The Big ‘I’ commends the Senate, and particularly Sen. Vitter, for their work on ensuring that the NFIP is extended for a meaningful amount of time,” said Charles Symington, Senior Vice President of Government Affairs for the Big “I”. “It is vital to our economy that there not be any interruption in the NFIP, and we urge the House to quickly pass this extension to provide Congress with more time to consider their long-term extension and reform efforts.”
Currently, the House and Senate are working on legislation that would make needed reforms to the program as well as extending it for a five year period. The Big “I” says that while the House overwhelmingly passed their version of the NFIP legislation, the “Flood Insurance Reform Act of 2011, in July of this year, the Senate version, the “Flood Insurance Reform and Modernization Act,” still needs consideration in front of the full Senate. Only after the Senate passes that bill can the House and Senate finally get down to business agreeing on a final bill.
As such, says John Prible, the Big “I” Vice President of Government Affairs, “Today’s action is a critical step and provides more time for work on the long-term reform and extension effort.”
Jimi Grande, Senior Vice President, Federal and Political Affairs for the National Association of Mutual Insurance Companies also weighed in on last night’s vote.
“Congress has thankfully avoided a lapse in the National Flood Insurance Program with the Continuing Resolution, but again we find ourselves waiting for real reform. This latest short-term extension is especially frustrating given how close reform legislation is to becoming law. The House has done their part by passing reform legislation with overwhelming, bipartisan support, and legislation in the Senate would be approved today if they’d only vote on it.”
Mr. Grande contends, however, that these short term fixes cannot go on forever. “Continuing to maintain this vital program through short-term extensions is unacceptable. As it stands, the program owes more than $18 billion to the taxpayers, and keeping the NFIP ‘as is’ only risks adding to that burden.”
Tom Santos, vice president for federal affairs at the American Insurance Association (AIA) concurs in the need for a real resolution.
“The six month extension under S. 1958 should allow Congress enough time to consider and pass a long-term extension with meaningful reforms that aim to strenthen the program. Necessary reforms include movement toward risk-based premiums and reduced price subsidies. AIA urges Congress to take action to avoid a lapse in the program and to protect the 5.6 million policyholders dependent upon the NFIP for their protection against floods.”
R.J. Lehmann, deputy director of the Heartland Institute’s Center on Finance, Insurance and Real Estate, sees a vicious cycle for the NFIP. “For years, Congress has delayed taking serious action to reform the NFIP, a program with $18 billion in debt that long has been on the Government Accountability Office’s high-risk list.” Mr. Lehmann explains. ” With the program’s statutory authorization set to expire December 16 at the end of the current continuing resolution, it appears likely to happen again, as Congress is almost certain to pass another short-term extension.”
“American taxpayers and homeowners deserve better than that, ” continues Lehmann. ” The bill under consideration in the Senate, much like the one passed earlier this year in the House, does not go far enough in shrinking the government footprint in the flood insurance market. But to the extent that both bills curtail some of the flood program’s most egregious problems, such as premium subsidies to roughly a third of NFIP policyholders and severe claims from repetitive loss properties, the reforms proposed in either bill would represent a good first step toward bringing fiscal sanity to the program.”