Last month, the Obama Administration stated its position on the reauthorization of the National Flood Insurance Program (“NFIP”). In a letter from Department of Homeland Security Secretary Janet Napolitano to Representative Barney Frank, chairman of the House Committee on Financial Services, the Obama Administration announced that it “supports meaningful reforms to the NFIP and reauthorization of the NFIP through Fiscal Year 2014.” The letter specifically states its support for and opposition to many reforms proposed in the House of Representatives and the Senate in recent years, as we previously reported here and here. The letter voices support for the following measures:
- forgiving the NFIP’s $19.2 billion debt incurred during the 2005 hurricane season;
- phasing in actuarially sound rates for non-residential properties, non-primary residences and repetitive loss properties;
- raising the cap on annual premium increases from 10 percent to 15 percent; and
- authorizing an ongoing program to review, update and maintain NFIP maps, as well as reestablishing the Technical Mapping Advisory Council to recommend improvements to flood mapping.
In contrast, the letter states that the Obama Administration opposes the following reforms:
- establishing multiperil insurance to cover damage resulting from windstorms and other perils in addition to coverage for damage resulting from floods;
- requiring Federal Emergency Management Agency claims adjustors to participate in state-sponsored mediation at the request of state insurance commissioners; and
- creating a “National Flood Insurance Advocate” to report directly to Congress on problems facing the NFIP.
We will continue to post further developments regarding the NFIP on InsureReinsure.com.
For a full copy of the letter, click here.