The House of Representatives has approved S. 3814, legislation that extends the National Flood Insurance Program (NFIP) through Sept. 30, 2011. The Senate passed the bill early last week, and the legislation now awaits President Obama's signature.
Without an extension, the program, which provides flood insurance coverage for more than 5 million homeowners, will expire Thursday.
‘We need to have a flood insurance program in place,’ says Robert E. Story, chairman of the Mortgage Bankers Association. ‘Without it, it is doubtful that home and building owners in areas of the country prone to flooding would be able to purchase insurance to protect their property against flood risk.’
In July, the House approved H.R.5114, which would raise maximum coverage limits, provide notice to renters about contents insurance and establish a ‘flood insurance advocate,’ which would be similar to the taxpayer advocate position at the Internal Revenue Service. The House bill would also phase in actuarial rates for properties built before the effective date of the first Flood Insurance Rate Map for a community.
"While we are eager for the Senate to pass such legislation, I am pleased that we have sent this extension to the president,’ says Rep. Barney Frank, D-Mass. ‘This extension will prevent any gap or disruption in the important work that the program does while the Congress completes its work on legislation to improve it."
Losses from the 2005 hurricane season and the NFIP's periodic need to borrow from the U.S. Treasury Department to pay flood insurance claims have raised doubts about the NFIP's long-term financial solvency, the Government Accountability Office (GAO) said in a report last week.
As of August, the NFIP's debt to the Treasury stood at $18.8 billion. The Federal Emergency Management Agency – the entity in charge of the NFIP – is unlikely to be able to pay off the Treasury in full, especially if the NFIP faces more catastrophic losses, the GAO says.