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Massive storms that swept across the northern Great Plains and powered floodwaters that breached several levees in the lower Mississippi River Valley the week of March 17 may have reignited awareness of protections offered by the National Flood Insurance Program. But efforts on the federal front to revise and reform the 40-year-old NFIP prior to its scheduled Sept. 30 expiration remain deadlocked, industry sources say.
Passed in September by the U.S. House, the Flood Insurance Reform and Modernization Act would propose a host of changes to the NFIP, including phasing out premium subsidies for commercial properties and second homes, introducing coverage of additional living expenses and business interruption, and raising maximum policy limits for the first time in more than a decade.
But the measure's most controversial proposal would allow NFIP policyholders the opportunity to purchase windstorm coverage from the federal government, as well as barring homeowners insurers that market NFIP policies through the federal Write Your Own program from excluding coverage for damage caused concurrently by both wind and water.
Based on a proposal from Rep. Gene Taylor, D-Miss., who sued State Farm as a policyholder over his own Hurricane Katrina-related claim, the windstorm coverage provision has drawn scorn from insurance industry sources, as well as some in the environmental movement. Now a consortium of groups has coalesced to oppose the idea. These include the Consumer Federation of America, Defenders of Wildlife, Environmental Defense, Friends of the Earth, National Wildlife Federation, Republicans for Environmental Protection, Council for Citizens Against Government Waste, Competitive Enterprise Institute, FreedomWorks, Taxpayers for Common Sense, Association of Bermuda Insurers and Reinsurers and the Reinsurance Association of America.
"The diversity of the consortium’s membership demonstrates that NFIP is much more than an insurance issue," RAA President Frank Nutter said.
Melissa W. Shelk, vice president of federal affairs with the American Insurance Association, said she believes the Senate will begin work on its own version of the bill during the eight-week work period that starts March 31, but said it remains "way too early" to offer predictions on how talks might progress, particularly given "the continuing unfolding events in the housing markets."
"You've got two different versions, assuming that the Senate version passes. Those would have to be reconciled," Shelk said. "My opinion is that they would have to do something by the August recess, but one way or another, they have to do something by Sept. 30."
That much work remains to be done became clear following a recent attempt by Senate Banking Committee Chairman Chris Dodd, D-Conn., to "hotline" the bill, a procedure under which party leaders notify members by way of special telephone lines installed in each member's office that a measure is set to be moved without debate, amendment or a roll-call vote. If no members register objection within a pre-set time frame, their consent is presumed.
The hotline revealed continued objections from Louisiana and Mississippi's Senate delegations, who have placed a hold on S. 2284, the version of the flood bill passed by the Senate Banking Committee in October, given their insistence that Congress must include the optional windstorm coverage provisions that were bundled in the House-passed version. Although not a part of the Senate's formal rules or standing orders, informal tradition permits a member to request a temporary or permanent "hold" be placed on a bill. Senate leaders are not bound to honor the request.
While those objections were somewhat expected, what wasn't were new objections raised by, among others, Senate Majority Whip Richard Durbin, D-Ill., who has concerns with how revised flood maps will affect portions of his home state, as well as from noted budget hawks Tom Coburn, R-Okla., and Jim DeMint, R-S.C., who are concerned by the Senate proposal to forgive the $17.5 billion in debts accumulated by the flood program in the wake of 2005's catastrophic storms.
"As far as best case scenarios go, with regard to timing, we could see some movement before Memorial Day," said Paul Kangas, director of federal government relations with the Property Casualty Insurers Association of America. "We're not seeing that there's any great initiative for a hearing, because we've been hearing-ed out on this issue. Everyone knows what the issues are, and now it's just a matter of the rubber hitting the road in terms of people recognizing that something is going to have to move sooner or later."
(By R.J. Lehmann, Washington bureau manager: firstname.lastname@example.org)