The National Flood Insurance Program (NFIP), which expired at midnight on May 31, is not expected to be able to issue new policies for a week or longer.
As reported by Insurance Journal last Friday, Congress left town for the Memorial Day holiday without acting on legislation to reauthorize the program and Congress is not expected to take it up again until June 7, at the earliest. Bills have been introduced in both the House and the Senate to extend the program until the end of the year, but Congress has yet to consider these measures.
The hiatus– the fourth within a year– comes at the opening of the Atlantic hurricane season, which forecasters say will be very active.
If past NFIP suspensions are any indication, it will mean frustration and delays for property owners and property buyers and insurance agents trying to serve them.
“The series of temporary extensions, last minute actions and service lapses during such a delicate period in the American economy is troubling to agents, homeowners and small businesses,” says Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers, or Big “I.”
Symington said the program is meant to provide some level of stability and protection for homeowners and businesses against unpredictable flooding events, “not to be an unpredictable ‘here one minute-gone the next’ program subject to monthly congressional action.”
Insurers also lamented the lack of federal action.
“Once again, the NFIP has become a victim of politics that have nothing to do with the program itself,” said Kathy Mitchell, National Association of Mutual Insurance Companies, federal affairs director. “Allowing the NFIP to lapse just as the 2010 storm season is beginning shows a troubling lack of judgment on the part of Congress.”
Many in the insurance industry support a five-year extension of the program. Congress has traditionally extended the program for five year periods but in the past year it began extending the program only for short periods, from 30 days to six months, as the reauthorization has become tied up with controversial legislation involving unemployment benefits, tax breaks, Medicare payments to doctors and other issues unrelated to flood insurance.
“Lapses in this program cause confusion and leave many homeowners and small businesses unprotected during a very dangerous time. The Big ‘I’ is also concerned that the uncertainty of temporary extensions and the numerous lapses that have already occurred in the last few months will negatively impact the market,” said Robert Rusbuldt, president and CEO of the Big “I.”
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