Florida residents got some good news this week, right in the middle of hurricane season, when fears of flood damage and insurance claims are high in the state. The U.S. House of Representatives approved a one-year reauthorization of National Flood Insurance Program (NFIP). Because the Senate had approved the renewal earlier, the measure now goes to President Obama for his signature.
The renewal comes just in the nick of time. The program would have expired on September 30, 2010. The bill, expected to be signed before the deadline, will extend the program to September 30, 2011. Proponents commented that the renewal will bring "much needed stability and security" to the program and the 5.5 million policyholders who benefit from it.
The program's stability has been questioned for a number of reasons. First, NFIP has expired four times in the last year, causing delays in issuing flood insurance policies. For consumers, those delays meant delayed closings on new home purchases.
Next, the program is $18 billion in debt. While critics claim the program is unsustainable in its current form, proponents counter that the one-year term guaranteed by this bill will allow Congress to address NFIP's shortcomings, including the deficit.
Insurance industry representatives are promoting changes to NFIP that would include offering business interruption insurance and expanding living expense coverage.
The House passed another NFIP bill, HR 5114, that is now in a Senate committee. That bill calls for a five-year extension of NFIP as well as significant program reforms. The proposals include expanded coverage as well as increased premiums. It also calls for NFIP to help insureds resolve problems with the Federal Emergency Management Agency and to help communities and homeowners interpret floodplain maps.
Resource: National Underwriter "NFIP Gets One-Year Extension" 9/24/10