Insurance group calls for 6-month NFIP extension in wake of HarveyPosted On: Aug. 30, 2017 9:30 AM CST
The Property Casualty Insurers Association of America is calling for at least a six-month extension of the National Flood Insurance Program to allow the Federal Emergency Management Agency to deal with Tropical Storm Harvey claims.
David A. Sampson, PCI’s president and CEO, said the extension was needed to provide FEMA Administrator Brock Long and his staff “the space they need to help the people devastated by Hurricane Harvey put their homes and businesses back together.”
“While PCI and our members support meaningful reforms to the program, passing a minimum six-month extension of the program will allow time for many of the claims from Hurricane Harvey to be settled and any ongoing concerns identified and addressed before Congress and FEMA make significant reforms to the program,” he said in a statement on Wednesday.
FEMA has $1.7 billion available to pay Harvey claims and $5.8 billion in borrowing authority, not including additional resources that reinsurance may provide, according to the agency.
“We have not yet determined if our reinsurance program will come into play, however we have communicated with all 25 reinsurance companies to let them know we are closely monitoring this event,” a FEMA spokeswoman said via email.
Any NFIP extension should provide for the borrowing authority necessary to pay claims and include the Flood Insurance Market Parity and Modernization Act, Mr. Sampson said, referring to a bill that clarifies that people who buy private flood insurance should receive the same treatment as those who purchase it through the NFIP if they're trying to obtain federally backed mortgages that require flood insurance. Absent this clarification, lenders have been confused about what private coverage can be accepted for mandatory purchase requirements.
The bill also specifies that consumers who choose to leave the NFIP to purchase private insurance won’t lose continuous coverage status if they have either an NFIP or private policy, which stakeholders say is critical to ensuring consumers aren’t unfairly penalized for shopping for better policy options in the private market.
The bill is a source of rare bipartisan agreement, as it was unanimously passed by the House Financial Services Committee in June and adopted by the full House unanimously last year.
“The bill would allow more private sector risk-bearing, thus relieving some of the taxpayer burden that the program is under now,” Mr. Sampson said. “One immediate lesson that we have already learned from Harvey and recent previous storms is that too few homeowners and businesses have flood protection and this bill also would expand consumers’ flood options.”