As the East Coast continues to struggle with rampant floods caused by Hurricane Irene and Tropical Storm Lee, there may be hope on the horizon for many without flood insurance. The Senate Banking Committee has voted to overhaul the National Flood Insurance Program (NFIP) instead of letting the program cease at the end of the month. The panel’s vote supports an overarching legislation that would ensure that the federal insurance program would continue to run for another five years, a bill that had already been passed but was whose execution was halted due to financial doubts.
With the committee’s approval, the bill has begun receiving renewed support, which is heightened by the instances of flooding now plaguing many states along the East Coast. Currently, NFIP supplies flood insurance policies to more than 5 million homes and businesses throughout the nation. Private insurance companies sell policies and manage claims through the program, but the ultimate financial risks lie within the hands of the federal government. Given the current economic turmoil, many legislators have been wary of putting the federal budget at any undue risk.
Lawmakers will have to determine exactly how the federal insurance program is to be reformed. There are several plans being considered, but none have gained popularity amongst majority parties. One common theme resounds throughout these plans, however, and that is higher rates for flood insurance coverage overall.