Congress begins talks concerning NFIP
Federal lawmakers are now responding to growing pressures from agencies, insurance companies and consumers and have begun debates concerning the fate of the National Flood Insurance Program (NFIP). The program is scheduled to expire at the end of this month. If the expiration is allowed, millions of homeowners throughout the country will face lapses in insurance coverage that could have devastating consequences. Hurricane season is scheduled to begin June 1 – one day after NFIP is scheduled to expire – giving lawmakers limited time to find solutions to the numerous problems facing the flood insurance program.
Program’s expiration could create problems during hurricane season
The Federal Insurance and Mitigation Administration, a branch of FEMA, believes that allowing NFIP to expire would send ripple effects throughout the country’s insurance industry. For new property owners, it could mean the difference between having a mortgage or not. Many mortgages hinge on whether a homeowner has flood insurance or not. The expiration of NFIP would make it more difficult for those living in high-risk areas of the country to find the coverage they need to sustain their mortgages.
Short-term extensions have been common for the program
NFIP has survived for several years because of short-term extensions provided by Congress. In the past, lawmakers have not been inclined to solve the problems that are threatening to dismantle the program, such as its out-of-control debt, which comes in at a staggering $18 billion. FEMA believes that the policies offered through the program are major contributors to its financial problems. These policies are less expensive that those offered by other insurance companies and programs. As such, the premiums collected by NFIP are not able to cover the risk the program faces from natural disasters.
Lawmakers may examine the problems of NFIP but are not expected to solve them
Federal lawmakers are expected to touch upon the problems of NFIP, but are unlikely to come up with a solution given their limited time frame. Though FEMA is pushing for more serious action to be taken on NFIP to ensure its future, the agency does not expect legislators to agree on more than another short-term extension for the program. While this may not be ideal, it would be better than letting the program collapse on the eve of hurricane season.