By Andrew G. Simpson
March 25, 2010
Insurance and real estate agents are being advised to prepare their clients for another possible interruption of the federal flood insurance program in three days, which could be longer than the one that happened last month.
The Senate is expected to vote today or tomorrow to extend it but there is concern this may not happen and, if it doesn't, the program could be down for weeks.
The National Flood Insurance Program (NFIP) is currently on schedule to expire at midnight on March 28. The Senate has voted to extend it until the end of the year, while the House has agreed to extend it just one more month, until the end of April. If the Senate, which has been preoccupied with healthcare legislation, does not act quickly to adopt the House measure, the program will expire Sunday night.
The program ran into down-to-the-wire problems last month also. The NFIP extension was incorporated into a bill that extended unemployment benefits and COBRA subsidies. But a vote was delayed for several days by Sen. Jim Bunning, R- Kentucky, over job insurance funding issues unrelated to the flood program. Since there was no vote, the NFIP expired on Feb. 28 for a few days. The night of March 2, the Senate passed an extension of the program until March 28 and President Obama signed the measure right away.
Some fear politics could again get in the way of a Senate vote before the March 28 deadline.
"As we've seen, these short term extensions create situations where the NFIP is allowed to lapse because of unrelated political or legislative issues. Hopefully, the program will be extended again and lawmakers will use that time to pass legislation reforming the program and extending it for a longer term," said Matt Brady, spokesman for the National Association of Mutual Insurance Companies.
"We still believe the extension will pass, but given recent history I think it's always a good idea for agents and brokers to be prepared for a hiatus," he said.
John Prible is also concerned about the possibility of delaying tactics in the Senate since the NFIP provision is again tied to a bill on unemployment benefits and COBRA subsidies. Prible is vice president of federal government affairs for the Independent Insurance Agents and Brokers (the Big "I"). But Prible said Senate staffers he spoke with today are "optimistic" the Senate will act this afternoon or tomorrow.
What really concerns Prible is that if the Senate does not act, the program could be out of operation for two weeks because Congress goes on a recess for that long.
"That's scary," Prible said.
While not perfect, the longer Senate extension until Dec. 31, 2010 would have at least kept the program running through the hurricane season, NAMIC's Brady noted.
The possible hiatus comes at a time when the Federal Emergency Management Administration (FEMA), which administers NFIP, state regulators and the industry are trying to get more people to buy flood insurance. March 15-19 was designated National Flood Insurance Awareness Week and state insurance departments have been issuing advisories urging consumers to purchase coverage.
According to the National Weather Service, more than one-third of the country is in danger of flooding this time of year.
The NFIP sunset last month caused headaches for insurance agents and their customers as well as delays for some consumers waiting to close on the sale of a property within a flood hazard area.
While no new policies can be issued during a lapse in authorization, consumers with current policies remain covered by the federal program, according to the National Association of Insurance Commissioners. Claims payments are not affected.
Insurance agent and company lobbyists have for years been pressing for a multi-year renewal along with broader reforms to the NFIP to no avail thus far.Bob Rusbuldt, Big "I" CEO and president, the Independent Insurance Agents and Brokers of America, has criticized Congress for letting NFIP lapse and not tending to reforms for NFIP.