House Expected to Go Along with 1 Year Flood Insurance Extension

By | September 23, 2010

Congress is on track to temporarily extend within days a troubled program that insures millions of U.S. homes and businesses against floods, with another push for a broad overhaul looking likely next year.

The Senate on Tuesday approved an extension through Sept. 30, 2011, of the National Flood Insurance Program, which has been deeply in debt ever since the costly hurricane seasons of 2004 and 2005. Repeated efforts to fix it have failed.

The House of Representatives was expected to concur with the Senate extension measure within days, Democratic Representative Barney Frank told Reuters after a hearing on Wednesday.

Big insurers with a stake in the flood insurance debate include Allstate, Travelers, Hartford Financial Services and Fidelity National Financial.

Republican Senator Lamar Alexander, in remarks to the Reuters Washington Summit on Wednesday, urged final approval of the extension measure that he and others are backing, while acknowledging that longer-term action is needed.

“We ought to have a sound flood insurance program,” Alexander told the summit.

“People ought to be aware of it, and like other programs it’s going to have to be financially sustainable.”

If the House does not act, the program will expire at the end of this month, potentially complicating real estate transactions in flood-prone areas across the United States.

A one-year extension will be a relief to communities along the Gulf Coast and give Congress “time to get serious about modernizing the program while continuing to allow those living in the floodplains access to flood insurance,” said Republican Senator Kay Bailey Hutchison in a statement.

Democratic Senator Christopher Dodd, chairman of the Senate panel that oversees the insurance business, held a hearing on Wednesday to look into the issue.

He said a thorough reform would be better than a one-year extension, the latest in a series of temporary patches.

“However, such an extension will, in my view, provide necessary program and market stability to homeowners, lenders, and insurers while Congress considers the next steps for the reform of the NFIP,” Dodd said.

The NFIP is administered by the Federal Emergency Management Agency (FEMA) and provides flood coverage through more than 90 companies that sell policies and collect premiums on the government’s behalf for a fee. The premiums go to FEMA.

Reform legislation stalled in Congress last year in a fight over adding wind-damage coverage to the program. The House wanted to add it, but the Senate did not.

The Dodd hearing on Wednesday “helped expose the many fundamental problems with the NFIP. It is evident that the financial challenges facing the program must be addressed,” said Leigh Ann Pusey, president of the American Insurance Association, an industry group.

“However, in the interim, a year-long extension is a much better alternative than multiple short-term extensions … Now that the Senate has acted, it is incumbent upon the House to pass the extension and the president to approve it as soon as possible,” Pusey said.

(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)

Topics Flood

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