National Flood Insurance Program Expires This Week if Senate Does Not Act

March 5, 2009 – Having been granted a temporary extension by the U.S. House of Representatives already, the measure extending the nation’s flood insurance program will expire tomorrow if the Senate continues to drag its heels on the matter.

The House last week approved extending through September the National Flood Insurance in its present form as lawmakers hash out differences in the program’s final makeup. The National Flood Insurance Program officially expires at 11:59 p.m. on March 6. Insurance agents and brokers no longer will be able to write, renew or endorse National Flood Insurance policies after that date unless the Senate acts to extend the program.

The proposed program extension is designed give members of the U.S. House of Representatives and Senate time to work out differences in the program’s direction. House members are demanding the program be expanded to provide insurance protection against wind damage, according to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.

Federal officials initially extended the flood insurance program in its current form until March 6 when members of the House and Senate could not agree on a final version that would initiate program reforms while extending it for several years.

Extending the program in its current form had received sharp criticism from advocates for program reform.

“Given the current economic crisis, it’s not surprising that Congress has decided to punt on this issue for now,” said Eli Lehrer, a member of the Competitive Enterprise Institute. “But I am disappointed. This simply puts off the absolutely necessary action of changing the program in a fundamental way.”

The National Flood Insurance Program extension failed to address a request from Florida officials for a $17 billion federal line of credit to boost the state’s depleted Hurricane Catastrophe Fund. Another controversial plan would create a national catastrophe plan aimed at helping Florida and other Gulf Coast states.

Florida Insurance Commissioner Kevin McCarty recently met with the staff of two of Florida’s Congressional representatives to secure a $17 billion federal letter of credit to boost the state’s depleted catastrophe fund. Florida officials are proposing a federal line of credit on which the state would pay a premium and would repay through bonding and statutory assessments.

McCarty wants a line of credit that “would be triggered only in the extremely unlikely event that a storm exceeding the claims paying ability of the Cat Fund were to hit Florida and the credit markets were still in disruption,” according to a Florida insurance department official.