On July 31, the U.S. Senate joined the House in passing a four-month extension of the National Flood Insurance Program (NFIP), to Nov. 30, 2018. President Trump quickly signed the measure into law. As a result, a lapse of the NFIP was averted by a matter of hours.
Millions of Americans woke up on July 31 not knowing whether congressional inaction would leave the flood insurance program they rely on hobbled in the height of hurricane season. The passage of a clean extension is positive. That said, waiting until the last minute to act should be a thing of the past. Congress now has four months to work to find a way to provide a long-term re-authorization of the program. That work should begin today.
PIA has been actively working with Congress for more than a year to encourage the long-term re-authorization of the National Flood Insurance Program (NFIP) with needed reforms. However, as both the expiration deadline and the height of the Atlantic hurricane season approached, PIA endorsed a “clean” extension of the program for as long as possible, to allow lawmakers time to continue to find areas of agreement on important reforms.
The history of NFIP extensions is a long one. The program was extended 17 times between 2008 and 2012 when the previous five-year re-authorization was signed into law. The program lapsed four times in 2010 and 2011, once for more than a month.
Difficult to find agreement
The tendency for Congress has been to postpone action on flood insurance absent agreement. It’s a tough issue to resolve. Allowing the NFIP to expire can never be an option, but multiple short-term extensions and short lapses in the program mean the real work of reform has yet to be done.
In late 2017, the House did pass a bill, the 21st Century Flood Reform Act (H.R. 2487). This bill would provide a five-year re-authorization and includes PIA-supported reforms, such as overhauling the flood mapping process, allowing the use of more precise risk-assessment tools to determine premiums, and creating an appeals process for local governments or homeowners to challenge federal mapping decisions. Many of these items will benefit consumers and strengthen the future viability of the program.
PIA ultimately opposed H.R. 2487 because of a short-sighted provision that would lower something called the Write-Your-Own (WYO) reimbursement percentage by two or three points. This reimbursement is used by carriers to pay administrative expenses as well as agent commissions, among other costs. Under such a scenario, carriers would likely be forced to pass any cut to the WYO rate on to agents through their commissions. Needless to say, for PIA such a provision was — and continues to be — a deal breaker.
Congress has voted itself another four months to come up with a long-term re-authorization of the NFIP with bipartisan reforms. It is more than possible. PIA will continue to work with lawmakers to find common ground on reforms in a re-authorization of the program that recognizes the key role independent agents play in delivering it to homeowners and business owners.