Flood Insurance Hearing Held in Washington

Senators Jon Tester, D-Mont., and David Vitter, R-La., held a hearing today examining the need for long-term reauthorization and reform of the National Flood Insurance Program. The flood program program is set to expire at the end of the month.

Sen. Tester called on his colleagues to reauthorize the program for the long-term.

“We’ve been down this road before, and we’ve seen how unproductive and destructive lapses of the program can be,” Tester said. “The unprecedented flooding in the Missouri River basin at this time last year further reminds us of the urgency of passing a long-term reauthorization that offers Americans – and Montanans – certainty in the face of risk.”

Sen. Vitter also supports reauthorization. “Extending the flood insurance program is not a partisan issue, it’s just a matter of getting floor time,” Vitter said. “I’ll continue fighting to get this done before the clock runs out at the end of the month.”

Vitter sent a bipartisan to Reid on February 13, signed by 41 Senators, urging for immediate floor consideration of the five year reauthorization. He said he is currently circulating another letter to his colleagues for signatures.

Sen. Roger Wicker, R.-Miss., was among those who testified. He suggested that with many Americans frustrated with Congress, Washington “needs a bipartisan” accomplishment and flood insurance legislation would be a good candidate for one.

The hearing was held by the Economic Policy Subcommittee of the Banking Committee. The hearing featured a number of experts:

South Carolinian Jensen represented independent insurance agents at the hearing. In his testimony, Jensen outlined the reasons the IIABA (the Big “I”) believes Congress should modernize the program and shore up its finances. He also stressed that the marketplace, and the NFIP’s 5.6 million consumers, are increasingly frustrated with the nature of the short-term extensions granted to the program and that “they deserve the stability granted by a long-term extension.”

Jensen’s said the program’s current $17.2 billion debt, incurred in 2005, reveals some of the deficiencies of the program and has strained government resources.

PCI’s Sampson told members of Congress that even though it is in debt, the NFIP is providing government-subsidized flood policies at roughly one-third the private sector comparable premium. He said a RAND study estimated that FEMA is underpricing policies by 20 to 50 percent, and the Congressional Budget Office has estimated that the NFIP’s built-in deficit is at least $1.3 billion annually, with the Government Accountability Office (GAO) suggesting the true program subsidy is far higher.

“The NFIP is fiscally unsustainable in its current path and must be reformed,” Sampson said.

Authorization for the NFIP program has been extended on a short-term basis 12 times since Sept. 30, 2008. Sampson joined others in urging a longer-term reauthorization.

“A long-term reauthorization will ensure that there will be no gaps in coverage, which occurred four times in 2010 alone, each lapse longer than the previous with increasing uncertainty and frustration among consumers and providers,” he said.