Senate Rejects Adding Wind Coverage to Flood Insurance Program

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The U.S. Senate officially rejected a bid by Gulf state senators to add wind coverage to the financially strapped federal flood insurance program.

Lawmakers from Louisiana and Mississippi cited problems that occurred after Hurricane Katrina and other big 2005 storms when private insurers covering wind damage claimed that destruction to property resulted from flooding, thus shifting the burden of payments to taxpayers.

But the Senate voted 73-19 against the amendment by Sen. Roger Wicker, R-Miss., that would have provided optional multiple peril insurance as part of the 40-year old National Flood Insurance Program.

The Senate is debating legislation to bail out and overhaul the program, which expires at the end of September.

The Senate bill would forgive the more than $17 billion the Federal Emergency Management Agency owes the U.S. Treasury and restore fiscal integrity by requiring a larger deductible, requiring more at-risk homeowners to buy insurance, ending subsidies to some vacation homes and businesses, and increasing the allowable annual rate increase from 10 percent to 15 percent.

The flood insurance program, which is run by FEMA, operates in some 20,000 communities that adopt and enforce local floodplain maintenance plans. Now with 5.5 million policyholders, it generally paid its own way through premiums until hit by the catastrophic damage of Katrina.

The House passed its version of the bill with a new wind damage provision.

Fellow Mississippi Republican Thad Cochran said that many private insurers in coastal regions no longer offer wind insurance, and homeowners must turn to state pools where the premiums can be prohibitively expensive.

But Sens. Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., the chairman and top Republican on the Senate Banking Committee, opposed the wind damage amendment, saying it could expose the program to unacceptable risk exposure at a time when it was trying to recover from bankruptcy.

The White House, in a statement, said it supports passage of the bill but would recommend a presidential veto if a wind provision was added.

The Property Casualty Insurers Association of America said federal windstorm insurance “would needlessly displace the private market, disrupt existing state funds and create a significant burden for U.S. taxpayers.”