A House bill to reauthorize the National Flood Insurance Program through September 2015 falls far short of reform the program needs for financial solvency, experts and politicians testified during a congressional subcommittee hearing Thursday.
NFIP’s instability was the main reason cited by those who oppose U.S. Rep. Gene Taylor’s proposal to offer optional wind coverage. Taylor, D-Miss, was joined by Rep. Steve Scalise, R-La., in advocating wind coverage through NFIP. Both talked about the inherent conflict in having private insurance companies adjust their own wind claims, along with NFIP claims, after hurricanes.
Taylor pointed out that insurance companies such as State Farm and Nationwide denied claims for wind damage to flooded properties, contributing to a $53 billion federal tab for Katrina recovery. Average homeowners, federal judges and even congressmen were unable to get their wind claims paid, he said.
“If you can say one thing about the insurance companies after Katrina,” Taylor said, “they screwed everyone equally … It was the American taxpayers that paid.”
Others, including FEMA administrator Craig Fugate and a representative of the General Accountancy Office, believe wind coverage through NFIP could push the financially troubled program over the brink.
Taylor has an ally in subcommittee chairwoman Maxine Waters, D-Calif., who authored the NFIP reauthorization bill and is a cosponsor of Taylor’s multi-peril bill. Waters said her bill attempts to bring stability to a program with 5.5 million policyholders. Congress has been reauthorizing NFIP on a temporary basis, leading to two lapses in the program this year.
During lapses, NFIP is unable to write new policies or renew coverage, while buyers are unable to close on federally-backed loans in special flood hazard areas. At the same time, the housing market is struggling with an unprecedented surplus.
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