Extension of NFIP Likely. All Proposals Dead Until Next Year

Gene Taylor was in the news today in a report dealing with the extension of the current NFIP program until next year. While the article focuses on adding wind to the program, this extension kills all the various proposals, from those backed by the insurance industry to those backed by us slabbers. Maria Recio has the story for the Sun Herald:

Rep. Gene Taylor’s relentless two-year campaign to secure wind coverage as part of the federal flood insurance program is on the verge of failure, a victim of vicious opposition in the Senate, of suspicions about a new government program and ultimately, of bad timing.

“It looks like there will be an extension of the present program,” said Taylor, D-Bay St. Louis, in an interview. The National Flood Insurance Program expires Sept. 30 unless Congress acts and lawmakers, anxious to help victims of hurricanes Ike and Gustav, are looking for a simple extension – with no policy changes – while they focus on the $700 billion Wall Street bailout.

“The important thing is that the program would not lapse,” Taylor said. House Financial Services Committee Chairman Barney Frank, D-Mass., said last week that he wanted a seven-month extension until April 30. He introduced a bill late last week, H.R. 6965, that would extend the program by April 30. It may be on the House floor as soon as today, although Taylor aide Brian Martin said a vote was more likely Wednesday.

Congress is set to adjourn Friday for the elections and House and Senate conferees trying to work out differences in the differing flood insurance bills passed by each chamber are not close to agreement – especially on wind coverage.

“I’m still hopeful we can get a deal, but with the remainder of the schedule likely to be consumed by the problems facing our nation’s financial system, the flood insurance program may be extended into next year without the multiple-peril provision Rep. Taylor and I worked to include,” said Sen. Roger Wicker, R-Miss.

Wicker said he would continue to work on a solution and Taylor was resigned to having to start again next year.

“We’re not giving up,” he said, citing Frank’s pledge to him that the committee would return to the wind issue. “I can count on his support.”

If the program is extended into the next Congress, the House-passed bill modifying NFIP and including Taylor’s wind pool program would die, leaving lawmakers to start from scratch.

With the lawmakers on the House and Senate banking committees who oversee flood insurance focused on the financial bailout legislation, congressional sources said a seven-month extension was likely to pass. 

The Senate Banking Committee did not consider the wind provision last October when it approved a bill. When Wicker tried to attach it to the flood insurance program on the Senate floor, his amendment was soundly defeated 74-19.

Gulf Coast residents, recovering from Hurricane Katrina, discovered that insurers often would not recognize wind damage but immediately implemented the federal flood damage payments, which they administer.

The proposed wind program, the target of insurers, has also drawn criticism from Americans for Smart Natural Catastrophe Policy, a coalition of environmental, consumer, taxpayer and insurance organizations.

“It’s incredibly expensive and encourages development where it shouldn’t happen,” said Eli Lehrer, senior fellow of the Competitive Enterprise Institute, which is part of the coalition.

Lehrer said the latest study estimates the wind program, in a year with a catastrophic hurricane, would cost $140 billion.

“It’s something we can’t afford right now,” Lehrer said. “The private market basically works in the rest of the country.”

The House-passed Flood Insurance Reform and Modernization Act of 2007 (H.R. 3121) would enable policyholders in the flood insurance program to purchase wind policies, as well as making revisions in the overall program.

The Senate version of the bill would strengthen the flood zone mapping program, forgive the program’s $20 billion debt and institute mandatory coverage areas.

The House version of the bill does not forgive the program’s $17.5 billion debt.