Flood Insurance Could Lapse…Again


According to a post in today’s Insurance Journal, real estate agents and insurance agents are once again being advised to warn clients about a possible interruption of the federal flood insurance program in three days – an interruption that could last longer than last month’s lapse. The Senate is expected to vote tonight or tomorrow to extend the program, but if the vote doesn’t happen, the program could be down for weeks while Congress is in recess.

Currently, the NFIP (National Flood Insurance Program) is schedule to expire at midnight on March 28. While the House of Representatives has agreed to extend the program through the end of April, the Senate has been trying to get it extended through the end of 2010. However, if the Senate, which has been largely preoccupied with healthcare reform, does not adopt the House measure before Sunday night, the program will expire.

Just last month, the program went down to the wire in a similar fashion, when a bill extending COBRA and unemployment benefits as well was delayed on the floor by Senator Jim Bunning (R-KY) who had concerns about funding for job insurance. Without a vote, the NFIP expired on February 28th for a few days, until the extension through March 28th was finally passed and signed into law by President Obama on March 2nd.

There is a valid fear that politics could once again delay a vote to extend the program. Matt Brady, spokespan for the National Association of Mutual Insurance Companies told the press, “As we’ve seen, these short term extensions create situations where the NFIP is allowed to lapse because of unrelated political or legislative issues. Hopefully, the program will be extended again and lawmakers will use that time to pass legislation reforming the program and extending it for a longer term.” He continued, “We still believe the extension will pass, but given recent history I think it’s always a good idea for agents and brokers to be prepared for a hiatus.”

John Prible, vice president of the Big “I” (Independent Insurance Agents and Brokers) also shared concerns with the press, bringing up the fact that once again the NFIP extension is tied to a bill on unemployment benefits and COBRA. He said that the Senate staffers he’s spoken with are “optimistic” that a vote will happen by the end of Friday. Prible is more concerned over the fact that if a vote does not happen before the program expires, the Congressional recess could keep NFIP on hold for two weeks. Of that concept, he said, “That’s scary.”

The possible hiatus could not happen at a worse time of year. FEMA (the Federal Emergency Management Administraztion) which administers the national flood insurance program is trying to get more homeowners to purchase flood insurance, and last week was actually National Flood Insurance Awareness Week. FEMA cites information provided by the National Weather Service, which says that over a third of the United States is in danger of flooding at this time of year.

Insurance agent and company lobbyists have been pressing for a multi-year renewal of NFIP, along with broader reforms to the program, for the better part of a decade.

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