WASHINGTON (August 29, 2011) With recovery efforts underway along the East Coast in the wake of Hurricane Irene, the National Association of Mutual Insurance Companies (NAMIC) called on Congress to ensure that the National Flood Insurance Program (NFIP) will be there for homeowners when the next storm hits.
“The damage from Hurricane Irene should bring a focus on flood issues, but the fact is Congress already had more than enough incentive to act given the National Flood Insurance Program expires on Sept. 30 ,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “Even before Irene flooded parts of the northeast, historic levels of flooding this year have affected communities across the United States.”
The NFIP is currently set to suspend operations at the end of September. The program has been maintained under a one-year extension passed last year, and in recent years through a series of short-term extensions often passed after a lapse in the program occurred. Earlier this year, the House voted to approve legislation extending the program for five years and implementing significant reforms, but the Senate has yet to act.
“As Irene brings more attention to the issue, we are hopeful that the Senate will take meaningful action on NFIP reform, rather than resorting to a short-term extension,” Grande said. “Allowing the NFIP to expire, or returning to the ‘fits and starts’ of repeated short-term extensions often mixed with repeated lapses, would be a disaster.”
During a lapse in the program, insurers who participate in the NFIP are required to continue paying claims with the expectation of reimbursement once the program is reauthorized. While this serves to protect existing policyholders, no new coverage can be written during an NFIP hiatus. Since many lenders require coverage to obtain a mortgage on a property in a floodplain, a lapse in the NFIP can make buying or selling a home far more difficult.
“If Congress fails to act before Sept. 30, thousands of home sales could be delayed or cancelled altogether,” Grande noted. “This could cause significant damage to an already fragile economic recovery.”
Adding to the dangers of a lapse in the NFIP is the potential for another major storm.
“While the NFIP is set expire on Sept. 30, the hurricane season isn’t,” Grande said. “Major storms could strike the U.S. well into November, and Congress must do its part to ensure that the NFIP will be there when the American people need it."
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Posted: Monday, August 29, 2011 4:20:24 PM. Modified: Friday, September 02, 2011 11:02:50 AM.
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