Insurance trade groups urged Congress to reform and reauthorize the National Flood Insurance Program (NFIP) for the long term as members of a House subcommittee opened up a new round of debate over the troubled program.
"Last year, Congress allowed the NFIP to expire four times for a total of 53 days, and there have been 10 short-term extensions in less than three years. Lapses hurt consumers, millions of real estate professionals and our business," Donna Jallick, vice president of flood operations for Harleysville Insurance, said in testimony on behalf of the Property Casualty Insurers Association of America (PCI).
More than 5.5 million Americans depend on insurance through the program to protect their homes and businesses. Floods are not covered under standard business or home insurance policies.
The Subcommittee on Insurance, Housing and Community Opportunity of the House Financial Services Committee heard testimony March 11 from PCI and other insurance trade group representatives.
Rep. Judy Biggert, R-Ill., the chair of the subcommittee, has introduced draft legislation to reauthorize the NFIP for five years and phase in actuarial rates, among other things.
"We believe that Rep. Biggert's bill is a significant step in bringing fiscal sanity to the NFIP," Sandra Parrillo, chair of the National Association of Mutual Insurance Companies, said in a statement. "She should be commended for her work to strengthen the program and reduce its dependence on the taxpayers' money."
Parrillo testified that the NFIP's burden on taxpayers will grow because the rates charged to policyholders don't reflect the flood risk for their properties.
The program is $17.5 billion in the red due to losses and below-market rates. PCI has commissioned a study to identify the true federal subsidy behind flood insurance rates and will release the quantitative analysis at the beginning of April.