July 29, 2009 / 9:04 PM / 10 years ago

U.S. flood insurance program extended for 6 months

WASHINGTON (Reuters) - The U.S. National Flood Insurance Program, which covers millions of Americans in flood-prone areas, would be extended for six months under a bill approved by the House of Representatives on Wednesday, delaying further efforts to fix the troubled program.

The NFIP temporary extension measure will go next to the Senate for a vote. Passage there would give Congress time “when we come back in 2010 to deal with this in a comprehensive way,” said Representative Barney Frank on the House floor. He heads the House Financial Services Committee.

The NFIP will expire in September without an extension.

Frank said discussion on repairing the program needed to be put off due to other pressing matters, including healthcare and financial regulation reforms.

Big insurers with a stake in the flood insurance debate include Allstate, Travelers, Hartford Financial Services and Fidelity National Financial.

The program has been deep in debt ever since the costly hurricane seasons of 2004 and 2005. Repeated rescue efforts have failed. 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.

The Obama administration said in May that it “strongly opposes” adding wind-damage coverage.

In another disputed issue, the administration said it favors forgiving the 40-year-old program’s $19 billion debt.

Most of the insurance industry, frequently divided on other issues, opposes adding wind-coverage to the program on the ground that it would crowd them out of a viable business.

The NFIP is administered by the Federal Emergency Management Agency (FEMA) 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.

After Hurricane Katrina in 2005, some devastated homeowners accused insurers of dodging payouts by blaming damage on water and not wind, pushing claims onto the NFIP.

Lawmakers in the House responded to these homeowners’ woes, and to complaints that it was difficult to get wind-damage coverage in some areas, by adding it to the program.

But doing so could expose taxpayers to high costs, the Government Accountability Office, the investigative arm of Congress, concluded last year.

Reporting by Kevin Drawbaugh; Editing by Kenneth Barry

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