NFIP Ready for Five Year Renewal, But Without Major Reforms
U.S. lawmakers are poised to vote on a five-year renewal of the National Flood Insurance Program (NFIP) this week sans any major revisions, but with the promise to address more tangential issues such as the “wind vs. water” debate and the coverage of homeowners protected by levees.
A statement for Sen. David Vitter (R.-La.) Wednesday said that the NFIP renewal will be the next item of business in the U.S. Senate following conclusion of the Farm Bill and the debate on federally subsidized crop insurance. Vitter added Senate Majority Leader Harry Reid (D-Nev.) has officially filed “cloture” on the measure signaling it will be debated in the near future.
A vote could come as early as Friday. The NFIP renewal bill was originally up for a vote last month, but was delayed over partisan wrangling.
The Senate version of the NFIP fiver year renewal includes several small changes, but lack any major structural reforms to the program.
For example, in order to move the bill ahead Senators struck a compromise on the proper credit to local investments in “levees and other flood control infrastructure.” Rather than eliminating all flood insurance subsidies for properties protected by levees, homeowners would pay a higher rate.
“This agreement increases our chances for passing a long-term reauthorization of the National Flood Insurance Program, which is a national priority,” said Sen. Thad Cochran (R-Miss.) in a statement Wednesday.
Another compromise includes language that would allow the NFIP to “double check” total loss claims that may not be the result of flood damage. The so-called COASTAL Amendment introduced by Sen. Roger Wicker (R-Miss.) would use hurricane data collected by the National Oceanic and Atmospheric Administration and develop its owen engineering formulas to “to prevent the inappropriate shifting of wind claims to the flood program.”
“The National Flood Insurance Program has been barely hobbling along with a Band-Aid approach – extending it for short periods of time,” Vitter said. ‘Moving to a full five year reauthorization on the floor is great, much needed news for homeowners and the housing market.”
Despite the changes, many of the issues that have been dogging the flood insurance program remain unresolved.
A report by the Government Accountability Office last year said the NFIP remains hobbled by debt and management issues that have yet to be resolved. For example, the report said that as of June 2011 the NFIP still owed $17.8 billion to the U.S. Department of the Treasury for loans used to cover losses from the 2005 hurricanes and lacks oversight from managers at the Federal Emergency Management Agency (FEMA).
“The magnitude of this debt highlights the many financial challenges the program faces, including structural weaknesses in the way it is funded, and the managerial challenges that have affected FEMA’s administration of NFIP,” the GAO report said. “Any efforts to help stabilize NFIP will require addressing both the program’s financial challenges and its operational and management issues.”
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