Flood Insurance & COBRA Extended

Flood Insurance & COBRA ExtendedBig "I" Submits Congressional Testimony on National Flood Insurance Program


A few weeks ago, the Senate left town for the Easter recess without voting on extending the NFIP, thereby resulting in the program's expiration. The House had previously approved, by unanimous consent, a $9 billion measure containing one-month extensions of several programs including unemployment insurance, COBRA subsidies for health benefits and flood insurance. Senate leaders of both parties hoped to have their chamber approve the same bill before the Easter break, but Sens. Tom Coburn (R-Okla.) and Jim Bunning (R-Ky.) objected to the House bill saying it was not funded. A similar scenario occurred in early March. 

On April 15th, both the House and Senate passed the "Extensions" bill to extend the flood insurance program, COBRA benefit subsidies, unemployment insurance extension, and other programs through May. The flood insurance program and COBRA benefit subsidies were extended until May 31, 2010 and the unemployment benefits was extended until June 2, 2010. The retroactive were signed by the President and are now law.

"It is alarming that the NFIP was allowed to expire, causing so much confusion and potentially leaving desperate homeowners and small businesses unprotected for more than two weeks," says Robert Rusbuldt, Big "I" president and CEO. "The Big 'I' is greatly concerned that these short expiration periods, coupled with the uncertainty of temporary extensions, will negatively impact the market." 

In theory, the NFIP will now return to normal operations and, since the extension is also retroactive, then any new policy applications or renewals that were signed and submitted during the hiatus will be effective from the date of application (or in the case of waiting periods, the waiting period will start from the date of application).

"This series of temporary extensions, last minute actions and service lapses during such a delicate period in our economy is of great concern to our agents, homeowners and small businesses," says Charles Symington, Big "I" senior vice president of government affairs. "Though we are grateful that Congress extended this program, we are increasingly frustrated by these repeated one-month extensions and the periods of expiration that sometimes result from them. The National Flood Insurance Program is meant to provide some level of stability and protection for homeowners and businesses against dangerously unpredictable and costly flooding events, not to be an unpredictable 'here one minute-gone the next' program subject to monthly congressional action. The Big 'I' strongly urges Congress to pass a long term extension of this critical program."

In the 110th Congress, the Flood Insurance Reform and Modernization (FIRM) Act of 2007 made progress in the House and Senate. The legislation would have extended the program for five years and made significant and needed reforms to help put the program on sound financial footing. This summer, similar legislation was introduced in the House of Representatives.
Wednesday, the Big “I” submitted official testimony to the U.S. House of Representatives Committee on Financial Services Subcommittee on Housing and Community Opportunity hearing titled, “Legislative Proposals to Reform the National Flood Insurance Program.”

The Big “I” supports draft legislation, called the Flood Insurance Reform Priorities Act of 2010, by Subcommittee on Housing and Community Opportunity Chairwoman Maxine Waters (D-Calif.) and Ranking Member Shelley Moore Capito (R-W.V.) which would extend the program for five years and provide necessary reforms. In yesterday’s testimony, the Big “I” praised the bill in general saying, “Though IIABA has some recommended improvements to the draft legislation, the underlying long term extension is vital to provide stability and security to consumers.”

In addition to a long term extension, the Big “I” also called for the draft flood insurance legislation to be amended before Financial Services Committee consideration to modernize the NFIP by including optional business interruption and optional additional living expenses coverages on an actuarial basis.
The association noted that NFIP has been a successful program for consumers for more than 40 years; however it is time to modernize some aspects of the program for the 21st century. Allowing consumers the option to purchase business interruption insurance and additional living expenses, as can be done in the private market for other perils, will make the program more attractive to consumers and more actuarially sound.

The Flood Insurance Reform Priorities Act of 2010 is scheduled to be considered by the House Financial Services Committee next week