Federal legislators rules late last week to extend the lifetime of the National Flood Insurance Program (NFIP) until May 31, 2012. The program had been scheduled to expire at midnight on December 23, which would have caused millions to lose their flood insurance. The Independent Insurance Agents & Brokers of America has praised the extension granted to NFIP, though the program still suffers under the weight of massive debt that threatens its ultimate longevity.
For now, the program is safe, but legislators still need to tackle the financial issues that are currently crippling it. The program has been the subject of several short-term extensions throughout the year, but lawmakers have yet to settle on any real solutions. Some legislators want to see the program privatized so that larger insurance organizations can begin participating. Others wish to raise the rates for coverage so that the program can start to pay off its enormous debt. The extra time will give legislators some breathing room, allowing them to explore solutions to the problems plaguing the program.
Those covered by the program can enjoy their insurance policies for some time, but the fate of the program is still uncertain. If lawmakers cannot resolve NFIP’s problems, policyholders will need to find coverage elsewhere. This may be difficult as there are few insurance companies willing to sell policies in areas prone to floods. Those that do sell insurance in these areas tend to do so at prices that reflect their exposure to risk.