The National Flood Insurance Program has seen plenty of congressional action in the past couple of years, but in the eyes of an industry that relies on its flood-coverage foundation, it has been the wrong kind of action.
Though the property/casualty industry sees this as a program in serious need of an overhaul, the only change that is repeatedly made is to its expiration date. The expiration has been moved a few months at a time, sometimes a few weeks. The extensions seem to have grown closer together, though, and that's led to the worst-case scenario for insurers -- the NFIP being temporarily unfunded and left on hiatus.
Just in the past few months, Congress has let its expiration slip by three times. The first was for a few hours. Then it went dormant on March 1 and 2, two days in which no new policies could be written, nor existing ones extended. And then there was the 18-day gap through the first half of April.
"They're extremely, extremely disruptive," said Mark Davey, president and chief executive officer of Fidelity National Insurance Co., who said call volume spiked during this last lapse. "We're not selling policies. We're not servicing policies. We're answering questions."
While the program went into that lengthy coverage gap, flood waters rose across Rhode Island. And now, with its next expiration set at the end of May, the program could hit another hiatus just as hurricane season gets started.
The recent trouble with approving the program's continued funding comes from the legislative techniques being used for its extension. Congress often bundles several programs together into an extension bill. The list might include things that are easy, popular and even mandatory to give money to. The NFIP -- which virtually any lawmaker would acknowledge is serving a necessary role -- is among those easy decisions. But often, the party in power will also slip in sometimes-controversial programs.
The extensions include the federal unemployment benefits that have been supplementing state programs. Republicans in the Senate repeatedly stopped the bill, not for any particular content objection but because its billions in spending weren't paid for with budget cuts elsewhere. Democrats have had to push the bill past repeated filibuster threats.
One way to stop the cycle of unreliable, short-term extensions would be to pass a comprehensive reform of the program. But industry insiders aren't holding out much hope for this session. There is a reform bill that insurers generally favor, pitched by Rep. Maxine Waters, D-Calif., but even if it passes the House, nobody is sure of its fate in the Senate.
One major holdup of long-term change for the debt-ridden program is a years-long debate over whether the NFIP could also cover wind damage. Rep. Gene Taylor, R-Miss., has been the chief advocate of that idea -- a notion generally loathed by insurers. But even if his bill passes the House, which is possible, Taylor has a hard time figuring out how it will clear the Senate. He said there are a couple of senators in favor, but he thinks powerful Republican Sen. Richard Shelby of Alabama will oppose it. Even so, Taylor told BestWeek, "anything that is worthwhile around this place is a challenge."
That's a challenge insurers, who are crossing their fingers for Waters' effort, hope Taylor doesn't overcome.
(Jesse A. Hamilton, Washington bureau manager: [email protected])