Reaction to seventh short-term NFIP extension

Reaction to seventh short-term NFIP extension | Insurance Business

Reaction to seventh short-term NFIP extension

The House of Representatives has passed legislation which authorizes a seventh short-term extension of the National Flood Insurance Program (NFIP) to take it through until November 30. The bill is now sat with the Senate, which is under pressure to make a decision before the current NFIP expiration date of July 31.

By and large, the efforts of the House to avoid a total NFIP lapse have been applauded by the insurance industry. Despite the program’s sizable $25 billion debt, the NFIP supplies more than 5.2 million property owners with vital flood insurance coverage – protection that could be sorely needed if the US experiences a similar Atlantic Hurricane Season to 2017.

“Action by Congress to extend the authority for the NFIP and keep the program operational without lapse benefits both property owners and flood insurance stakeholders dedicated to helping protect what is most important,” said John Dickson, president and CEO at NFS Edge Insurance.

“The NFIP serves millions of property owners and represents a critical component to the overall flood insurance industry. While homeowners would benefit from a host of substantive reforms proposed by several lawmakers, recent changes adopted by FEMA and the efforts of Congress to maintain the NFIP without lapse are steps in the right direction.”

The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) released a statement thanking the House for “recognizing the critical role the NFIP plays” in the lives of millions of Americans. It’s now prompting the Senate to pass the extension before July 31.

“Following the House vote, the Big ‘I’ urges prompt action in the Senate to extend the NFIP before July 31,” commented Jennifer Webb, Big “I” counsel, federal government affairs. “A lapse in the NFIP during the height of hurricane season could impact the ability of the program to promptly pay claims if there is a major flooding event, delay recovery efforts related to the catastrophic 2017 storm season and disrupt real estate markets across the country.”

A four-month extension should technically enable more time for meaningful reform to be passed to the federal flood insurance bill. SmartSafer, a national coalition of environmental groups, taxpayer advocates, insurance stakeholders, housing organizations and mitigation advocates, has called for long-term reforms including “measures that promote mitigation against the threat of flooding; update and improve outdated flood-risk mapping techniques; ensure full communication of flood-risk data to communities and home-buyers; and ensure consumers can choose private flood policies.”

Despite many insurers applauding the decision of the House, not everyone is convinced by a seventh short-term NFIP extension. Non-profit public policy research organization, The R Street Institute, has released a statement expressing “deep disappointment” in the 366-52 vote in the House.

“The NFIP is unsustainable as currently constructed and Congress cannot continue to ignore its problems. Even after Congress moved last year to erase $16 billion of the agency’s debt, it still owes taxpayers roughly $20.5 billion. The Congressional Budget Office projects it will lose an average of $1.4 billion every year,” said R.J. Lehmann, R Street’s director of finance, insurance and trade policy.

“Over the past 20 years, the NFIP has come up for reauthorization 41 times and 38 times Congress has moved to extend it without adopting any needed reforms. That cycle must end. There are simple, common sense, bipartisan proposals to fix the issues that ail it: from encouraging the market for private coverage to investing in mapping and mitigation to addressing repetitive loss properties. We cannot afford any more delays. The time for action is now.”

What are your thoughts on the future of the NFIP? Join the discussion by commenting below.

 

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