Congress Returns to Debate Bill Extending Flood Program

The National Flood Insurance Program, which has been on hiatus for two weeks, is a component of a legislative effort that is Congress' first priority as lawmakers return from recess. Congress had failed before the recess to pass a bill extending a long list of federal programs, including the NFIP, leaving the business of flood insurance virtually paralyzed.

The extension bill had been blocked by Senate Republicans who object to its spending, saying it isn't paid for with matching cuts or savings elsewhere. The chief spending in the legislation is associated with the extension of unemployment benefits, but NFIP's inclusion meant that it, too, fell into hiatus after the March 28 expiration. The legislation would only extend it to the end of April, though, meaning yet another extension bill would be needed within two weeks.

The extension is expected to also be back-dated to fill in the program gaps -- both for the past two weeks and also for the two days at the start of March in which the NFIP experienced another hiatus. Until the program is funded again, no new policies can be written, nor renewals granted.

As Congress prepared for its April 12 return to session, a coalition of insurance and real-estate organizations sent a letter to leaders in the House of Representatives and Senate, asking them to get NFIP back on track.

"Failure to reauthorize the NFIP expeditiously when Congress returns will severely harm real estate markets, putting consumers at risk of uninsured losses and potentially putting additional tax money at risk to cover relief efforts," said the letter, signed by the American Insurance Association, National Association of Mutual Insurance Companies, Property Casualty Insurers Association of America, Independent Insurance Agents and Brokers of America, The Financial Services Roundtable and groups concerned with the real estate fallout. "If Congress fails to reauthorize the NFIP, it will still be paying for post-disaster relief for flood victims, yet it will be unable to collect premiums for renewing current flood insurance policies, which amounts to $2.85 billion annually. Devastating storms in the Northeast underscore the need for congressional action to reauthorize the NFIP immediately."

The bill was the first item on the Senate's April 12 calendar, though lawmakers may face some procedural hurdles before a final vote can take place.

"The level of irresponsibility that we've seen out of Washington on the flood program -- they just keep outdoing themselves," said Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies. He said the lawmakers have fallen into a "circus-like atmosphere surrounding the flood debate" and "they've been lucky that we haven't had another really bad storm season."

Insurers are meanwhile paying claims with the expectation they will be reimbursed. "Only in Washington does that make sense," Grande said.

The bill would also extend subsidies for COBRA, which have benefited health insurers as the assistance has kept unemployed people on the rolls of insurers.

(Jesse A. Hamilton, Washington bureau manager: Jesse.Hamilton@ambest.com)