Questions Loom For National Flood Insurance Program

Now firmly in the heart of hurricane season and less than two months away from the anniversary of Hurricane Matthew's visit to St. Johns County, property owners who need flood insurance are about to be thrown into a situation of uncertainty.

That's assuming Congress does not show more urgency to reauthorize the National Flood Insurance Program before it expires on Sept. 30. And there's absolutely nothing certain about that.

Those in the insurance and real estate industry are cautiously optimistic the program will be reauthorized in something close to its current form, but with Congress currently in recess and with its recent struggles to agree on anything, there is some anxiety.

Doug Wiles, president of Herbie Wiles Insurance in St. Augustine, said the industry has been through this situation before. The likely conclusion will be stopgap, temporary reauthorization just before the deadline - or possibly retroactively shortly after.

"There's a certain level of trust," Wiles said. "We think that's what they'll do, but there's not a guarantee."

In the meantime, there could be a lot of hassle. Wiles said anything less than a long-term reauthorization could result in headaches for buyers of flood insurance.

"What worries me about the reauthorization process is that Congress hasn't been able to do much in the last eight months," Wiles said. "How is that going to translate into passing the National Flood Insurance Program?"

Currently anyone who has insurance is covered. The problems might occur on Oct. 1 if the new NFIP plan has not been approved.

Those who are trying to renew or purchase new coverage after Oct. 1 would not be able to do so unless the program is renewed. Wiles said he might encourage policy holders to pay in full in advance in order to maintain coverage without any possibility of a lapse in coverage during a potentially stormy time of year.

But Wiles and other insurance agents won't be able to write a new policy during a period in which NFIP is not authorized.

That could be a big problem for someone who is considering buying a home. Many homes in the county - and throughout the state - are required to have flood insurance by their mortgage companies. And many who might not be required to have flood insurance will still want it, especially after the damage from Matthew last year.

Without the NFIP, those sales won't be able to go through. There are some offerings by private insurance companies, but not all mortgages accept private insurance, so NFIP is really key.

In fact, reauthorization is such a concern that Florida Realtors president Maria Wells has encouraged agents to schedule closings by Sept. 30 unless the NFIP is reauthorized.

According to a release by Florida Realtors, Wells is not overly optimistic that something is going to happen soon. Wells said the National Association of Realtors is considering an official Call To Action, which would urge all of its members to contact their respective lawmakers.

"There is nothing pending in the House or Senate so far to extend flood coverage through reauthorization," Wells said in the release. "NAR is hopeful all the hard work they have done to work with Congress to get a bill passed will still happen - however, there is nothing yet."

Wiles said it would be upsetting to the local economy if closings were delayed because of the insurance uncertainty.

"If you can't close on a house, what is that going to do to a whole myriad of people?" Wiles said.

Added to that worry is the fact that although industry experts expect the NFIP eventually will be reauthorized, nobody is quite sure what changes will be made to it. Will rates go up? And by how much?

Lawmakers are looking to have less financial burden on the federal government for flood insurance. How that happens is still a matter of debate and negotiation.

Sen. Marco Rubio of Florida joined five other senators in a bipartisan plan to reform NFIP that was published in the Wall Street Journal in June.

The plan pitched the idea of more money for mitigation. It also called for "a temporary freeze on interest on the NFIP debt; elimination of agency waste, mismanagement and contractor profiteering; and increasing NFIP enrollment."

The Independent Insurance Agents & Brokers of America has also asked the Federal Emergency Management Agency to "review out-of-date and overly complex procedures regarding NFIP underwriting."

Jennifer McPhillips, vice president for federal government affairs with IIABA, said whatever the federal government decides to do, it should act quickly and with the best interests of property owners in mind.

"A big concern among the industry is making sure that there is a program in place that is available and affordable for anyone that is either required to buy flood insurance or that wants to buy flood insurance," she said. "And making sure whatever comes out of Congress is sustainable and brings certainty to the marketplace."

Both McPhillips and Wiles are mostly confident that will happen eventually. But sooner is better.

"My simple answer is, 'sure (it will be reauthorized),' but between now and when they reauthorize, how much pain is Congress going to inflict on the average (property owner)?" Wiles said.