As we previously reported here, the National Flood Insurance Program (“NFIP”) will expire on September 30, 2010. In an effort to halt a series of short-term extensions occurring since 2008, last night the U.S. Senate passed the Flood Insurance Program Reextension Act of 2010 (S. 3814) (the “Act”) to extend the NFIP to September 30, 2011. The Act is sponsored by Sen. David Vitter (R-La.)
As we previously reported, the NFIP lapsed several times this year due to short-term extensions. During these lapses, NFIP was not in operation and did not issue new and renewal policies and did not increase coverage amounts on existing policies. According to the industry, these lapses delayed thousands of real estate transactions and left homeowners in flood prone areas vulnerable.
The industry applauds the U.S. Senate for passing the one-year extension before the NFIP expires next week and encourages the U.S. House of Representatives to adopt the Act. Charles E. Symington Jr., senior vice president for government affairs of the Big “I”, stated, “The recent series of expirations and temporary extensions are negatively impacting the market . . . . The Big ‘I’ commends the Senate, and especially Sen. Vitter, for passing this bill which will provide much needed stability and security for the NFIP and its five and a half million policyholders.”
Although the industry commends the one-year extension of the NFIP, the Act does not address recommended reforms to the NFIP attempting to stabilize the program and to decrease the NFIP’s current $18 billion debt as currently contemplated the Flood Insurance Reform Priorities Act of 2010 (HR 5114), sponsored by Rep. Maxine Waters (D-Calif.). The U.S. House of Representatives passed the Flood Insurance Reform Priorities Act of 2010 on July 15, 2010 and has been referred to the Senate Committee on Banking, Housing, and Urban Affairs.