As the claims from Sandy continue pouring in, the troubled federal program is about to face important decisions.
The National Flood Insurance Program, the only federal coverage against flooding in the United States, will face an estimated additional $6 to $12 billion in claims as a result of Hurricane Sandy, said the Federal Emergency Management Agency (FEMA).
The program can only borrow $2.9 billion more, after racking up an $18 billion debt from Katrina in 2005.
Flood insurance news reports from the deputy associate administrator for federal insurance at FEMA, Edward Connor said that the program does not have borrowing authority for any amount greater than that. That said, there has yet to be a request made by FEMA for additional borrowing authority. It is expected that Congress may act in the lame duck session, if the agency does make this request.
The White House is working very closely with FEMA to monitor the flood insurance cash balances.
The White House Office of Management and Budget and FEMA are working together to watch the flood insurance program’s cash balances and to monitor the claims that are still pending or that have yet to be made. Should they require additional borrowing authority in order to ensure that the program remains solvent, then the administration intends to work with Congress to make certain that the right steps are taken to move forward, said an official from the White House.
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There was $740 million available to NFIP as of November 20 in order to pay for the flood insurance claims, and it had nearly $3 billion in borrowing authority that had not been used. Until now, there have already been 131,191 claims related to the superstorm that have been processed by Sandy, and the program have paid out $142 million in claims.
In order to encourage faster Congressional legislation passage, the flood insurance program’s debt limit will probably have to be added to a deal that is working toward avoiding the much hyped “fiscal cliff” which would bring about tax increases of $600 billion as well as additional spending cuts, as of January of next year.