The House of Representatives voted today 354-67 to increase the borrowing authority of the National Flood Insurance Program (NFIP) by $9.7 billion.
The Senate, which already approved a similar increase but as part of a larger $60 billion Superstorm Sandy disaster relief measure, quickly approved the $9.7 billion for the NFIP by unanimous consent.
The NFIP already has about 114,000 pending claims in the Northeast from Sandy and is on track to run out of funds Jan. 7 unless it is allowed to borrow additional funds, according to the Federal Emergency Management Agency, which administers the flood program.
“Some experts estimate that damage from Sandy could generate as many as 139,000 claims, but without an increase in the borrowing authority only about 12,000 of these can be covered from existing funds,” said Charles Symington, senior vice president of government affairs for the Independent Insurance Agents & Brokers of America (Big “I”.) “In fact, FEMA itself recently acknowledged it could run out of money as early as next week. The Big ‘I’ strongly supports raising the NFIP borrowing authority in order to ensure that NFIP policyholders who had the prudence to purchase protection and have been paying their premiums receive the claims payment they are due.”
The House is scheduled to take up supplemental disaster aid worth $51 billion for Sandy victims on Jan. 15.
When it does debate that Sandy disaster relief, Congress should also take up legislation to encourage stronger state building codes to mitigate damage from future storms like Sandy, according to Jimi Grande, senior vice president of federal and political affairs for National Association of Mutual Insurance Companies (NAMIC).
“As we help the victims of Sandy recover, it’s also important that Congress consider what can be done to prepare for the next storm,” Grande said. “With every dollar of federal spending subject to scrutiny, studies have shown that every dollar of spending on disaster mitigation equates to four dollars in savings from reduced losses. Strong building codes have repeatedly been shown to be the most effective and efficient means of reducing losses from storms, and Congress can help encourage their use by including the Safe Building Code Incentive Act in the broader Sandy relief package to be considered later this month.”
The Safe Building Code Incentive Act creates an incentive for states to adopt and enforce minimum safety standards in construction statewide.
According to the Louisiana State University Hurricane Center, stronger building codes would have reduced the wind damages in that state from Hurricane Katrina by 80 percent, and a study conducted by Milliman last year found that the federal disaster aid spending would have been reduced by $11 billion had the Safe Building Codes Incentive Act been in place during the past 25 years.
“As we help the victims of Sandy recover, Congress can also start helping the victims of the next catastrophe by encouraging stronger, safer building codes,” Grande said.