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National Flood Insurance Gets Temporary Extension

This past Wednesday, September 22, the House of Representatives voted to extend the National Flood Insurance program. An action repeated by the Senate a day later. The bill is now on the way to the White House for the president’s signature and — at least for a few months — the people along the Gulf Coast and up the East Coast who live with the potential of hurricane-induced flood surge, have most of the protection they need.

Literally thousands of real estate transactions in these flood-plagued regions could have been derailed had the program been allowed to expire on September 30. This is not a long-term reprieve, however. It’s a temporary extension, with the debate sure to resume next year. Why? The NFIP, which is administered by the Federal Emergency Management Agency (FEMA) is deep in debt . . . drowning in debt . . . after the hurricane seasons of 2004 and 2005. Yep, Katrina is the gift that just keeps on giving.

Senators like Kay Bailey Hutchison, R-TX, are calling for “modernizing the program while continuing to allow those living in the floodplains access to flood insurance.” Senator Chris Dodd, Democrat, and chair of the Senate panel that oversees the insurance industry, called the extension necessary to provide “market stability for homeowners.”

More than 90 companies sell policies under the program and collect premiums on behalf of the government — for a fee. Which means the insurers, including Allstate, Travelers, Hartford, and Fidelity National, have an interest in seeing the NFIP straightened out as well.

Whether or not the ensuing year will be taken as a time to examine the needs of the people on the coasts — including whether or not an element of wind protection should be added to the government program — remains to be seen. This is an issue that has gotten back-burnered in Washington more than once.

However, lawmakers should remember — and FEMA, in particular, should remember — that the federal government has failed these residents (especially the ones living on the Gulf Coast) once after Katrina and failed them in a big way. That original failure should not be compounded by inactivity on a federal program that is badly needed in the region and should be re-crafted with the Katrina experience in mind.

Five years after the fact, the Gulf Coast has still not recovered and, if hit again, not just the hurricane, but sheer government inefficiency could leave those coastal areas economically and socially crippled for decades to come.

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