| WASHINGTON, Sept 16
WASHINGTON, Sept 16 A senior Senate Republican
urged the House of Representatives on Tuesday to back down and
accept the Senate's terms in negotiations to renew the U.S.
flood insurance program, set to expire in two weeks.
As Texas struggled to recover from Hurricane Ike and the
Midwest from heavy flooding, insurance lobbyists said Congress
was locked in a standoff over the future of a 40-year-old
federal program that insures millions of American homeowners.
Alabama Sen. Richard Shelby, the top Republican on the
banking committee and a veteran of insurance legislation, told
reporters, "We've got a good bill ... I hope the House will
take our bill. If they don't, they're making a mistake."
Legal authority for the National Flood Insurance Program
(NFIP) will expire on Sept. 30 unless the Senate and the House
can reconcile their differences over whether to add wind damage
coverage to it, and whether to forgive its $18-billion debt.
Expiration of the program could rattle the already shaky
housing market since federally backed mortgages needing flood
coverage could not close while the program is in limbo.
"The devastation of Hurricane Ike and the flooding in the
Midwest have underscored how crucial it is that Congress renew
this vital program," said David Sampson, president of the
Property Casualty Insurers Association of America.
"Time is short, and the consequences of allowing this vital
program to expire would be serious," he said. "Not only would
5.5 million policyholders lose the security of flood coverage,
but there could also be dire consequences for the nation's
Steven Adamske, a spokesman for House Financial Services
Committee Chairman Barney Frank, said: "We have been meeting
with Senate staff. Discussions have been under way. We are well
aware of the Sept. 30 deadline and we want to get this done."
TEMPORARY EXTENSION POSSIBLE
If lawmakers cannot reach an agreement by Sept. 30, Shelby
said, a temporary extension could be needed. "I'd hate to see
it, but that's generally what happens," he said.
Big insurers with a stake in the debate include Allstate
Corp (ALL.N), Nationwide Financial Services Inc NFS.N,
Fidelity National Financial Inc (FNF.N), Travelers Cos Inc
(TRV.N) and Hartford Financial Services Group Inc (HIG.N).
The NFIP has been swimming in red ink since Hurricane
Katrina slammed into the U.S. Gulf Coast in 2005 with high
winds and a massive flood surge. The devastating hurricanes of
2004-2005 revealed deep problems within the NFIP, but efforts
to fix it have resulted in disagreement.
The Senate voted in May to extend the NFIP until 2013 and
forgive its debt. The House of Representatives also has voted
to extend the program, but added a controversial wind damage
coverage clause to its bill, and refused to forgive the debt.
Negotiators from both chambers have been expected to settle
their differences in a compromise bill to send to President
George W. Bush, but that still has not happened.
Bush has threatened to veto the House bill. The insurance
industry opposes adding wind coverage, as does Shelby.
"We're not going to take up wind insurance," he said.
He called a possible wind coverage pilot program "bad for
the economy. I think the president would veto it. If he didn't,
I'd be shocked. A lot of us would filibuster it," he said,
referring to a method of obstructing a measure through extended
Seven insurance industry groups -- which often disagree
among themselves on other matters -- banded together to sign a
letter sent on Tuesday to congressional leaders urging action.
(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)