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Insurance industry groups oppose plan to halt National Flood Insurance Program

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WASHINGTON—Insurance industry and business organizations, including the Risk & Insurance Management Society Inc., have sent a letter to U.S. House leaders urging them to oppose a measure that would terminate the National Flood Insurance Program.

The House is likely to vote this week on the Flood Insurance Reform Act of 2011. Among other things, H.R. 1309 would extend the NFIP through Sept. 30, 2016, and examine whether the private insurance market should play a greater role in the flood insurance market.

The Obama administration endorsed the measure this month, which the House Financial Services Committee approved unanimously in May.

Rep. Candice Miller, R-Mich., has drafted an amendment to the bill that would end the NFIP by January 2012 and allow states to form regional insurance compacts to spread the risk. The Miller amendment, one of about 20 expected to be offered during debate on the bill, would continue to allow the Federal Emergency Management Agency to assist the states and the private sector on flood insurance issues.

Pooling risk ‘virtually impossible'

In a letter sent Monday to House Speaker John Boehner, R-Ohio, and Minority Leader Nancy Pelosi, D-Calif., the 20 groups said terminating the NFIP would be “unwise,” adding that the nature of flood risk “makes it virtually impossible to pool risk” broadly enough for the private market to offer “viable and affordable” coverage.

“At this time in our economy, intentionally creating disruption and concern for homeowners, businesses and the housing sector is a bad policy decision,” the groups said in the letter.

In addition to RIMS, signatories include the American Insurance Assn. the Council of Insurance Agents and Brokers, the National Assn. of Mutual Insurance Cos., the Property Casualty Insurers Assn. of America, the Reinsurance Assn. of America and the U.S. Chamber of Commerce.

The Miller amendment failed on a voice vote late Tuesday afternoon, but its sponsor requested a formal recorded vote, which did not take place immediately.

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