WASHINGTON (July 22, 2010) Legislation was pulled from a final vote by the House of Representatives today that would have expanded the National Flood Insurance Program. The legislation would have had significant negative consequences for taxpayers and consumers, according to the National Association of Mutual Insurance Companies (NAMIC).
“We are pleased to see that the House leadership decided to pull the bill from consideration, recognizing that this bill could effectively lead to nationalized insurance for windstorm coverage,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “An expanded NFIP would still charge inadequate rates for its new wind policies. Not only would this expose taxpayers to new costs, but it would also create a situation in which the federal government is unfairly competing against the private insurance market, not only in coastal states, but all across the country.”
The Multiple Peril Insurance Act, also know as H.R. 1264, was introduced in March by Rep. Gene Taylor, D-Miss. The bill would allow the NFIP to sell windstorm coverage to those who have already purchased flood insurance, or combine the two into a single, multi-peril policy. Under the proposed legislation windstorm coverage would apply to hurricanes, cyclones, tornadoes, or any other event in which wind was involved.
“The NFIP is already facing a debt of nearly $20 billion, which was borrowed from the taxpayers in the wake of the 2005 hurricanes,” Grande said. “Even FEMA has acknowledged that it will never be able to repay that debt, and by expanding the NFIP this bill would put the taxpayers at risk for an even greater exposure.”
Additionally, it is important to note that the Obama administration did not support the passage of H.R. 1264 and issued a Statement of Administrative Policy opposing the legislation because it believes the legislation would create a massive and unnecessary new federal program that would incur enormous deficits following a hurricane of any significance.
“NAMIC believes that bipartisan, common sense reforms moving the NFIP back to actuarially based underwriting and pricing should be a priority for Congress,” Grande said. “With House leadership recognizing the problems this legislation would create, we are hopeful that we can now focus on the important work of reforming and reauthorizing this vital program.”
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