Sen. Vitter proposes seven-month NFIP extension

by R.J. Lehmann on April 26, 2012

In a potential resolution of the growing dispute between those of us who favor passing long-term reforms of the National Flood Insurance Program now, and those – lately, to include the Federal Emergency Management Agency – who urge a two-year extension of the current program, Sen. David Vitter, R-La., has introduced legislation that would extend the program through the end of 2012.

Along with Sen. John Tester, D-Mont., Vitter has taken a lead role in pushing for permanent reforms to the broken NFIP system, so his efforts here are not just kicking the can down the road. It is, rather, a pragmatic recognition of the fact that the current program is set to expire May 31, and it remains unclear whether Senate leadership will agree to schedule floor time for a vote in time to avoid yet another lapse in the program.

One hopes that Vitter’s bill, S. 2344, won’t actually be needed. We in the SmarterSafer coalition remain optimistic that the bill the Senate Banking Committee passed last September would pass overwhelmingly, just as the House bill did last July. Indeed, 41 bipartisan senators already have made public their support for bringing the bill to the floor. We’ve also been hearing encouraging things from staffers that Senate Majority Leader Harry Reid, D-Nev., is prepared to clear some floor time for a vote, so long as non-germane amendments can be kept to a minimum. And on the House side, Financial Services Committee Spencer Bacchus, R-Ala., has seemed fairly amenable to compromise on places where the chambers’ bills differ, suggesting that any conference committee could be wrapped up pretty quickly.

Nonetheless, May 31 is just five short weeks away, and there can be no guarantee that all of this work will be finished in that time frame. A seven-month extension provides a bit more breathing room, while keeping the program’s expiration within the current session of Congress. Effective Jan. 1, 2012, both the existing House and Senate reform bills – which phase out premium subsidies and enable FEMA to explore private reinsurance for the NFIP – will be officially null and void. We’ll have to go back to the drawing board all over again.

That’s why we’re concerned that the Independent Insurance Agents & Brokers of America, whose members are in Washington, D.C. this week for their annual convention, have taken to supporting the so-called “clean” two-year extension. As reported by National Underwriter:

Tuesday, Charles Symington, senior vice president of government affairs for the IIABA, says the IIABA supports FEMA’s call for a multi-year extension of the NFIP.

In fact, Symington says, “this Thursday nearly 1,000 agents will be visiting their lawmakers on Capitol Hill urging them to either reach agreement on the Flood Insurance Reform and Modernization Act or to pass a clean and simple multi-year extension.”

Symington says that, “This program is simply too important to the marketplace and consumers to be facing the threat of expiration every three to six months.”

We agree that short-term extensions aren’t exactly ideal. But that’s why SmarterSafer supports a full five-year reauthorization!

“The current NFIP is broken and, without real reform, our communities will be far less safe, our environment will be threatened, and the program will remain billions of dollars in debt to U.S. taxpayers,” said “FEMA’s proposal to extend the NFIP for two years in its current form ignores both Administration policy as well as overwhelming bipartisan support of Senators on the Banking Committee and Representatives who voted for flood reform in 2011. urges Congress to couple any extension with real reform.”

It hardly serves anyone’s interests – policyholders, taxpayers, insurers, insurance agents, or the environment – to continue to extend an unsustainable program, one that is $18 billion in debt and subsidizes development in the most risk-prone and environmentally sensitive regions.

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