Buoyed in political deadlock, federal flood insurance program lapses

Story updated with input from the National Association of Professional Insurance Agents.

For the third time in the last few months, the National Flood Insurance Program (NFIP) has expired, with legislators in Washington, D.C., unable to reach a compromise on long-term expansion of the initiative for now.

On March 25, the U.S. Senate adjourned until April 12, without addressing HR 4851, the Continuing Extension Act of 2010, which extends a number of programs for the unemployed, as well as a proposed short-term extension of the NFIP, through April 30. The House approved the measure March 17, but without Senate approval, the program’s funding ended March 28, essentially shutting it down.

The debate over the cost of the bill, however, has divided Republicans and Democrats, even more so following recent federal health reform legislation. On the Senate floor, March 25, Sen. Tom Coburn (R-Okla.) halted passage of the bill, indicating “we will pass this bill and add to the debt.

“Because of that, I object,” Coburn said.

Senate Majority Leader Harry Reid (D-Nev.) then scolded Coburn and his party.

“I understand that Republicans are upset they didn’t get their way,” Reid said, referring to health reform. “I know they are disappointed that Democrats have listened to the American people, and that we succeeded in finally delivering the change our citizens have demanded and deserved for decades. But Republicans should not take out their anger on the least fortunate, which is exactly what they are doing by objecting to these extensions. They should not kick the unemployed while they are down.”

Retroactive upon return

In making a motion to adjourn the Senate until April 12, Reid noted that the adjournment doesn’t mean “we are going to run to the airports tonight,” and that discussions on the unemployment compensation extension bill and the NFIP extension will continue.

Media reports indicate that the Senate is likely to vote on the package April 12, making coverage for the various elements of the bill, including the NFIP, retroactive.

That approach is not sitting well with the National Association of Mutual Insurance Companies, according to its spokesman, Matt Brady.

“This is now the third time in recent months that the National Flood Insurance Program has been allowed to lapse, and each time for reasons that have little or nothing to do with the program itself,” Brady told IFAwebnews.com.

He added that coverage will remain in place for those who have protection through the NFIP, but just like the last lapse in February and the one prior to that last year, there is a “serious impact” on those looking to close a home sale in flood-prone areas.

“Once the program is reauthorized after Congress returns from recess, we hope lawmakers will take the time to enact a long term extension with common sense, bipartisan reforms that will ensure the financial stability of the NFIP,” Brady said.

The National Association of Professional Insurance Agents also expressed its disappointment with the inactivity in Washington, D.C.

“When lawmakers return from their current recess, they should immediately extend the flood insurance program for one year to restore stability to our real estate markets and then schedule hearings this year on comprehensive reforms to the NFIP, which lead to a reauthorization of at least five years,” said PIA National President-elect Brian Marino, co-chair of the association’s working group on natural catastrophes, in a statement. “Congress needs to stop playing games with this.”

Marino added that at the end of one of the most sever winters in the nation’s history, “the snow is melting, the rivers are rising and Congress is leaving its constituents unprotected.”

The Senate has its own bill – HR 4213 – that would extend the NFIP through Dec. 30, as part of another measure on extending benefits and tax cuts, but the latter issue is stalling passage among the parties.