NFIP Set to Expire at Start of Hurricane Season; Third Program Lapse in 2010

WASHINGTON – The National Flood Insurance Program (NFIP) is set to expire on May 31, leaving homeowners and communities vulnerable at the start of hurricane season. This expiration will cause the third lapse in NFIP coverage this year.

“Congress has once again failed to extend the National Flood Insurance Program,” said David Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI). “The flood program will expire on Monday, leaving homeowners vulnerable at a critical time and adding more uncertainty to the real estate market.”

Beginning June 1, the official start date of the Atlantic hurricane season, no flood policies will be issued or renewed until after Congress returns from the Memorial Day recess and passes an NFIP extension. In addition, existing policyholders cannot increase their coverage limits. This will prevent real estate closings from taking place during this time, if a property is in a floodplain where the purchaser is required to obtain flood coverage under federally-backed mortgage requirements.

“This vital program protects over 5.5 million homeowners across the country,” said Sampson. “Floods are the most common natural disasters to occur in the United States. We urge Congress to make NFIP reform a top priority as residents in Tennessee are still recovering from devastating floods and coastal communities are preparing for the start of hurricane season.”

PCI supports H.R. 5114, the “Flood Insurance Reform and Priorities Act of 2010”, sponsored by Representative Maxine Waters (D-Ca.). The bill provides for an important 5-year program extension through 2015 and limiting additional federal exposure to natural disasters. “We need a long-term, sustainable solution to the flood program,” said Sampson.

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association.  PCI members write over $180 billion in annual premium, 37.4 percent of the nation’s property casualty insurance.  Member companies write 44 percent of the U.S. automobile insurance market, 30.7 percent of the homeowners market, 35.1 percent of the commercial property and liability market, and 41.7 percent of the private workers compensation market.