September 23, 2010 / 10:06 PM / 8 years ago

Congress backs 1-yr flood insure program extension

WASHINGTON, Sept 23 (Reuters) - The U.S. House of Representatives voted on Thursday to extend for a year a troubled program that insures more than 5.5 million homes and businesses against floods, sending the measure to President Barack Obama, who is expected to sign it into law.

The National Flood Insurance Program has been deeply in debt since the costly hurricanes of 2004 and 2005. Repeated efforts in Congress to overhaul it have failed.

But Democratic and Republican lawmakers told Reuters this week they expect to try again next year to craft reforms.

“The flood program definitely needs work,” Representative Spencer Bachus, top Republican on the House Financial Services Committee, said on Thursday at the Reuters Washington Summit,

Floods are the most common natural disasters to occur in the United States. Standard homeowners insurance does not cover flooding and must be purchased through the NFIP.

Big insurers with a stake in the flood insurance debate include Allstate (ALL.N), Travelers (TRV.N), Hartford Financial Services (HIG.N) and Fidelity National Financial (FNF.N).

The program is administered by the Federal Emergency Management Agency and provides flood coverage through more than 90 companies that sell policies and collect premiums on the government’s behalf for a fee. The premiums go to FEMA.

“A one year extension gives Congress the time necessary to debate the more fundamental reforms the program needs. But, between now and then, homeowners living in flood-prone areas will have the stability, protection and peace of mind to go on with their lives,” said Blain Rethmeier, a spokesman for the American Insurance Association, an industry group.

Reform legislation stalled in Congress last year in a fight over adding wind damage coverage to the program. The House wanted to add it, but the Senate did not.

Since 2008, the program has functioned under a series of short-term extensions. This year, Congress has let the program lapse four times, meaning new flood insurance policies could not be written and complicating thousands of real estate transactions daily in flood-prone regions, according to the Property Casualty Insurers Association of America.

“Today’s vote in the House will help ensure that the NFIP will be there for the final two months of this year’s hurricane season and much of next year’s as well,” said Jimi Grande, a senior vice president at the National Association of Mutual Insurance Companies, another industry group.

“It will not, however, fix the problems with the NFIP itself. The program is financially unsustainable and failing to address that only makes the problem worse for homeowners, insurers and the American taxpayers,” Grande said.

“We at NAMIC urge members of Congress to use these next 12 months to fix this vital program, which protects millions of homes and businesses across America.” (Reporting by Kevin Drawbaugh; Editing by Dan Grebler)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below