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Flood Insurance Program Extended for 60 Days

Congress has granted the National Flood Insurance Program (NFIP) another in a string of short reauthorizations, this time extending it through July 31, 2012
June 1, 2012

Senate Agreement Paves Way for Passage of Five-Year Bill

Congress has granted the National Flood Insurance Program (NFIP) another in a string of short reauthorizations, this time extending it through July 31, 2012. While this may appear on the surface to be simply another stopgap extension, there is a difference: a commitment by both Democrats and Republicans in the Senate to get a comprehensive bill passed and enacted in 60 days.

Senate Majority Leader Harry Reid (D-Nev.) announced an agreement with Sen. David Vitter (R-La.) that he will bring the Senate’s 5-year NFIP extension bill to the floor for a vote during the 60-day extension period. Furthermore, it is the intent of the Majority Leader to pass the Senate five-year bill, work out the differences between the House and Senate bills and have a final passage of a comprehensive five year reform bill for the President to sign – all within the 60 day period.

“For the first time in a very long time, a consensus seems to have formed around the need to enact a long-term reauthorization of the NFIP which incorporates needed reforms,” said Mike Becker, assistant vice president of federal affairs of PIA National. “Even more significant is the commitment from leadership in the Senate to pass a bill, reconcile it with House-passed legislation and send it to President Obama for his signature, all in the next 60 days.”

“In light of this commitment, we are cautiously optimistic that the NFIP can finally be put on a sound footing for many years, providing needed certainty and ending the off-again, on-again stopgap reauthorizations, which is no way to run a flood insurance program,” Becker said. “We congratulate Senate Majority Leader Harry Reid (D-Nev.) and Sen. David Vitter (R-La.) for this achievement in forging the consensus needed to move forward.”

Additional language was added to the short-term extension passed in the Senate on May 24, in the House on May 30 and signed by President Obama that phases out premium subsidies for vacation homes and second homes. The flood insurance premiums of residential properties that are not the primary residence of an individual will increase by 25 percent a year until the average risk premium equals the actuarial rate. This provision is permanent (not limited to the 60 day extension) and goes into effect July 1, 2012. The Congressional Budget Office estimates that this change will generate $2.4 billion in new premium over ten years.

The last-minute extension repeats a pattern that has become all-too-familiar over the past decade. The NFIP has continued on short-term reauthorizations since its last long-term authorization, which expired in September 2008. The short-term extensions resulted in 53 days of temporary lapses in 2010. The NFIP was temporarily extended four times in 2011. These lapses and reinstatements began in 2002.

Read more on the NFIP extension: President Obama Signs 60-Day NFIP Bill (National Underwriter 6/1/12)