Insurance Quotes & Advice

Just days before the National Flood Insurance Program(NFIP) was set to expire, the Senate approved the extension that the House had passed earlier.  This unfortunate yet expected outcome is the result of months of disagreement between the House and Senate over competing bills to re-institute the program.

The House and Senate had failed to come to terms on the details of a longer term extension earlier in the session. Among the dividing issues are whether to add wind coverage to the flood program and whether to forgive NFIP’s debt. This 6-month measure buys lawmakers time until next March to iron out those differences.

The problem of finding a long term agreement now falls to the next congressional session.  However with the government hemorrhaging money to deal with the financial crisis at a potential cost of nearly $2 trillion, it is quite possible that the next Congress may not have the will to add significant costs to the existing program and balloon the budget deficit further.

That could spell doom for the possible inclusion of wind coverage which has been highly controversial due to the expected price tag.  However at a time when property insurers are beginning to cut back on wind coverage, a public source for coverage may be more necessary than ever.

But then again this is Congress we are talking about, they have been profligate spenders in the past, so it is not out of the realm of possibility that they both add wind coverage and forgive the NFIP’s debt the next time they meet.

With the National Flood Insurance Program(NFIP) which is run by FEMA is set to expire in less than two weeks, the House is looking to pass a seven month extension on the controversial program.  Despite months of negotiations, the House and the Senate have been unable to reconcile the differences in the respective bills each had passed months ago.

With Texas recovering from Hurricane Ike and the Midwest from heavy flooding, Massachusetts Democratic Rep. Barney Frank introduced the extension bill in the House, saying it would give negotiators time to complete work on a permanent extension and “assess the implications of the 2008 hurricane season.”

The current hurricane season will probably only exacerbate the problems between the two halves of Congress.  So far this year. there have been three significant storms that have made landfall on U.S. soil which have caused considerable damage, Fay, Gustav and Ike.

At a time when the economy is struggling and the government is facing increased liability from bailouts to financial institutions. there is serious doubts on the economic viability of the program.  The bills from both the House and Senate each have their drawbacks.

The Senate bill would forgive the $18 billion in debt the NFIP has run up since Hurricane Katrina.  The House version, while it would not forgive the debt, would add wind coverage to it, when combined with the proposed National Catastrophe fund, the government could face hundreds of billions in potential liability.

Since it is unlikely that they will come to an agreement in the next two weeks, their only solution is extend the current program and let the next administration and Congressional session deal with the problem.

With the U.S. at the peak of hurricane season and fresh off a massive evacuation of the Gulf Coast, natural disasters are fresh in America’s mind.  A nation catastrophe insurance fund has become a popular topic that both political parties have moved strongly to support.

The Republican National Committee pledged its support to improve federal natural disaster insurance as part of its platform. The GOP’s support of federal disaster insurance reform follows the Democratic National Committee’s platform call to develop a National Catastrophic Insurance Fund in late August.

The action by the DNC and RNC platforms echo the strong bipartisan support demonstrated by the House of Representatives when it passed, by a 258-155 margin, the Homeowners’ Defense Act of 2007, says Collins.

During both their respective National convention, both parties unveiled their platforms on federal insurance reform.  Both sides agree that the federal government needs to take a stronger hand and work in partnership with the insurance industry to make a comprehensive plan for disaster relief while providing affordable insurance for the American consumer.

It won’t be easy, even now the House and Senate have yet to come to agreement to the re-authorization of the National Flood Insurance Program(NFIP).  They now have less than a month to reconcile the key differences in their respective legislation before the NFIP is set to expire on September 30th.

Legislation on a National Catastrophe Fund will be equally difficult and a major hang up will be the cost.  While both parties may claim to be in favor of smaller government, this type of legislation will be expensive and could put taxpayers on the hook for hundreds of billions.